Correlation Between First Horizon and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both First Horizon and Citizens Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Horizon and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Horizon and Citizens Financial Group, you can compare the effects of market volatilities on First Horizon and Citizens Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Horizon with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and Citizens Financial.
Diversification Opportunities for First Horizon and Citizens Financial
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Citizens is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and First Horizon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Horizon are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of First Horizon i.e., First Horizon and Citizens Financial go up and down completely randomly.
Pair Corralation between First Horizon and Citizens Financial
Assuming the 90 days trading horizon First Horizon is expected to under-perform the Citizens Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, First Horizon is 1.69 times less risky than Citizens Financial. The preferred stock trades about -0.23 of its potential returns per unit of risk. The Citizens Financial Group is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 2,112 in Citizens Financial Group on September 14, 2024 and sell it today you would lose (56.00) from holding Citizens Financial Group or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Horizon vs. Citizens Financial Group
Performance |
| Timeline |
| First Horizon |
| Citizens Financial |
First Horizon and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and Citizens Financial
The main advantage of trading using opposite First Horizon and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon position performs unexpectedly, Citizens Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Citizens Financial will offset losses from the drop in Citizens Financial's long position.| First Horizon vs. First Horizon | First Horizon vs. First Horizon | First Horizon vs. Citizens Financial Group | First Horizon vs. Customers Bancorp |
| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America | Citizens Financial vs. KeyCorp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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