Correlation Between Santa Cruz and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Santa Cruz 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 Santa Cruz and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santa Cruz County and Citizens Financial Corp, you can compare the effects of market volatilities on Santa Cruz 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 Santa Cruz with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santa Cruz and Citizens Financial.
Diversification Opportunities for Santa Cruz and Citizens Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Santa and Citizens is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Santa Cruz County and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp and Santa Cruz 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 Santa Cruz County 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 Corp has no effect on the direction of Santa Cruz i.e., Santa Cruz and Citizens Financial go up and down completely randomly.
Pair Corralation between Santa Cruz and Citizens Financial
Given the investment horizon of 90 days Santa Cruz is expected to generate 1.19 times less return on investment than Citizens Financial. But when comparing it to its historical volatility, Santa Cruz County is 1.91 times less risky than Citizens Financial. It trades about 0.08 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,676 in Citizens Financial Corp on September 25, 2024 and sell it today you would earn a total of 749.00 from holding Citizens Financial Corp or generate 44.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 73.55% |
| Values | Daily Returns |
Santa Cruz County vs. Citizens Financial Corp
Performance |
| Timeline |
| Santa Cruz County |
| Citizens Financial Corp |
Santa Cruz and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santa Cruz and Citizens Financial
The main advantage of trading using opposite Santa Cruz and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santa Cruz 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.| Santa Cruz vs. Citizens Financial Corp | Santa Cruz vs. Farmers Bancorp | Santa Cruz vs. Alpine Banks of | Santa Cruz vs. Taylor Calvin B |
| Citizens Financial vs. Banco Bradesco SA | Citizens Financial vs. Itau Unibanco Banco | Citizens Financial vs. Lloyds Banking Group | Citizens Financial vs. Deutsche Bank AG |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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