Correlation Between Citizens Financial and Regions Financial

Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Regions 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 Citizens Financial and Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citizens Financial Group and Regions Financial, you can compare the effects of market volatilities on Citizens Financial and Regions 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 Citizens Financial with a short position of Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Regions Financial.

Diversification Opportunities for Citizens Financial and Regions Financial

0.99

Correlation Coefficient

Citizens Financial  Regions Financial

No risk reduction

The 3 months correlation between Citizens and Regions is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial and Citizens Financial 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 Citizens Financial Group are associated (or correlated) with Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of Citizens Financial i.e., Citizens Financial and Regions Financial go up and down completely randomly.

Pair Corralation between Citizens Financial and Regions Financial

Assuming the 90 days horizon Citizens Financial Group is expected to generate 1.09 times more return on investment than Regions Financial. However, Citizens Financial is 1.09 times more volatile than Regions Financial. It trades about 0.03 of its potential returns per unit of risk. Regions Financial is currently generating about 0.03 per unit of risk. If you would invest  3,425  in Citizens Financial Group on September 24, 2024 and sell it today you would earn a total of  635.00  from holding Citizens Financial Group or generate 18.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Citizens Financial Group  vs.  Regions Financial

Citizens Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Citizens Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Regions Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Regions Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citizens Financial and Regions Financial

The main advantage of trading using opposite Citizens Financial and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Regions 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 Regions Financial will offset losses from the drop in Regions Financial's long position.

The idea behind Citizens Financial Group and Regions Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.