Correlation Between Associated Banc and Citizens Financial

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

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

Diversification Opportunities for Associated Banc and Citizens Financial

0.86

Correlation Coefficient

Associated Banc  Citizens Financial

Very poor diversification

The 3 months correlation between Associated and Citizens is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Associated Banc Corp and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and Associated Banc 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 Associated Banc Corp 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 has no effect on the direction of Associated Banc i.e., Associated Banc and Citizens Financial go up and down completely randomly.

Pair Corralation between Associated Banc and Citizens Financial

Assuming the 90 days trading horizon Associated Banc Corp is expected to generate 0.73 times more return on investment than Citizens Financial. However, Associated Banc Corp is 1.36 times less risky than Citizens Financial. It trades about -0.09 of its potential returns per unit of risk. Citizens Financial Group is currently generating about -0.15 per unit of risk. If you would invest  2,197  in Associated Banc Corp on September 14, 2024 and sell it today you would lose (91.00) from holding Associated Banc Corp or give up 4.14% of portfolio value over 90 days.

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

Associated Banc Corp  vs.  Citizens Financial Group

Associated Banc Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated Banc Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Associated Banc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Citizens Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citizens Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Associated Banc and Citizens Financial

The main advantage of trading using opposite Associated Banc and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Banc 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.

The idea behind Associated Banc Corp and Citizens Financial Group 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.