Correlation Between Prosperity Bancshares and CIT Group
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares and CIT Group 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 Prosperity Bancshares and CIT Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and CIT Group Preferred, you can compare the effects of market volatilities on Prosperity Bancshares and CIT Group 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 Prosperity Bancshares with a short position of CIT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and CIT Group.
Diversification Opportunities for Prosperity Bancshares and CIT Group
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prosperity and CIT is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and CIT Group Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIT Group Preferred and Prosperity Bancshares 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 Prosperity Bancshares are associated (or correlated) with CIT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIT Group Preferred has no effect on the direction of Prosperity Bancshares i.e., Prosperity Bancshares and CIT Group go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and CIT Group
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 2.06 times more return on investment than CIT Group. However, Prosperity Bancshares is 2.06 times more volatile than CIT Group Preferred. It trades about 0.07 of its potential returns per unit of risk. CIT Group Preferred is currently generating about 0.08 per unit of risk. If you would invest 5,810 in Prosperity Bancshares on August 31, 2024 and sell it today you would earn a total of 2,563 from holding Prosperity Bancshares or generate 44.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. CIT Group Preferred
Performance |
| Timeline |
| Prosperity Bancshares |
| CIT Group Preferred |
Prosperity Bancshares and CIT Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and CIT Group
The main advantage of trading using opposite Prosperity Bancshares and CIT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares position performs unexpectedly, CIT Group 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 CIT Group will offset losses from the drop in CIT Group's long position.| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp |
| CIT Group vs. KeyCorp | CIT Group vs. KeyCorp | CIT Group vs. Fifth Third Bancorp | CIT Group vs. Citizens Financial Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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