Correlation Between First Republic and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both First Republic 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 Republic 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 Republic Bank and Citizens Financial Group,, you can compare the effects of market volatilities on First Republic 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 Republic with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Citizens Financial.
Diversification Opportunities for First Republic and Citizens Financial
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Citizens is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, and First Republic 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 Republic Bank 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 Group, has no effect on the direction of First Republic i.e., First Republic and Citizens Financial go up and down completely randomly.
Pair Corralation between First Republic and Citizens Financial
Assuming the 90 days horizon First Republic Bank is expected to under-perform the Citizens Financial. In addition to that, First Republic is 70.22 times more volatile than Citizens Financial Group,. It trades about -0.04 of its total potential returns per unit of risk. Citizens Financial Group, is currently generating about 0.16 per unit of volatility. If you would invest 2,455 in Citizens Financial Group, on August 30, 2024 and sell it today you would earn a total of 236.00 from holding Citizens Financial Group, or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 87.74% |
| Values | Daily Returns |
First Republic Bank vs. Citizens Financial Group,
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Citizens Financial Group, |
First Republic and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and Citizens Financial
The main advantage of trading using opposite First Republic and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic 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 Republic vs. Finnair Oyj | First Republic vs. EvoAir Holdings | First Republic vs. Ryanair Holdings PLC | First Republic vs. Willscot Mobile Mini |
| Citizens Financial vs. Celsius Holdings | Citizens Financial vs. Modine Manufacturing | Citizens Financial vs. BRP Inc | Citizens Financial vs. Lifevantage |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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