Correlation Between Atlanticus Holdings and Citizens Financial

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

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

Diversification Opportunities for Atlanticus Holdings and Citizens Financial

-0.56

Correlation Coefficient

Atlanticus Holdings  Citizens Financial

Excellent diversification

The 3 months correlation between Atlanticus and Citizens is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Atlanticus Holdings 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 Atlanticus Holdings 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 Atlanticus Holdings 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 Atlanticus Holdings i.e., Atlanticus Holdings and Citizens Financial go up and down completely randomly.

Pair Corralation between Atlanticus Holdings and Citizens Financial

Assuming the 90 days horizon Atlanticus Holdings Corp is expected to generate 0.6 times more return on investment than Citizens Financial. However, Atlanticus Holdings Corp is 1.67 times less risky than Citizens Financial. It trades about 0.19 of its potential returns per unit of risk. Citizens Financial Group is currently generating about -0.01 per unit of risk. If you would invest  2,220  in Atlanticus Holdings Corp on September 3, 2024 and sell it today you would earn a total of  180.00  from holding Atlanticus Holdings Corp or generate 8.11% return on investment over 90 days.

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

Atlanticus Holdings Corp  vs.  Citizens Financial Group

Atlanticus Holdings Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlanticus Holdings Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Atlanticus Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Citizens Financial

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Atlanticus Holdings and Citizens Financial

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

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.