Correlation Between Washington Federal and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Washington Federal 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 Washington Federal and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Citizens Financial Group,, you can compare the effects of market volatilities on Washington Federal 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 Washington Federal with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Citizens Financial.
Diversification Opportunities for Washington Federal and Citizens Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and Citizens is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal 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 Washington Federal 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 Washington Federal 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 Washington Federal i.e., Washington Federal and Citizens Financial go up and down completely randomly.
Pair Corralation between Washington Federal and Citizens Financial
Assuming the 90 days horizon Washington Federal is expected to generate 3.18 times more return on investment than Citizens Financial. However, Washington Federal is 3.18 times more volatile than Citizens Financial Group,. It trades about 0.08 of its potential returns per unit of risk. Citizens Financial Group, is currently generating about 0.17 per unit of risk. If you would invest 1,211 in Washington Federal on August 27, 2024 and sell it today you would earn a total of 542.00 from holding Washington Federal or generate 44.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 33.84% |
| Values | Daily Returns |
Washington Federal vs. Citizens Financial Group,
Performance |
| Timeline |
| Washington Federal |
| Citizens Financial Group, |
Washington Federal and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and Citizens Financial
The main advantage of trading using opposite Washington Federal and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal 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.| Washington Federal vs. Capital One Financial | Washington Federal vs. Capital One Financial | Washington Federal vs. Bank of America |
| Citizens Financial vs. Axos Financial | Citizens Financial vs. Byline Bancorp | Citizens Financial vs. KB Financial Group | Citizens Financial vs. Nu Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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