Correlation Between Citizens Financial and Alphabet

Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Alphabet 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 Alphabet 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 Alphabet, you can compare the effects of market volatilities on Citizens Financial and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Alphabet.

Diversification Opportunities for Citizens Financial and Alphabet

0.63

Correlation Coefficient

Citizens Financial  Alphabet

Poor diversification

The 3 months correlation between Citizens and Alphabet is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and Alphabet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Citizens Financial i.e., Citizens Financial and Alphabet go up and down completely randomly.

Pair Corralation between Citizens Financial and Alphabet

Assuming the 90 days trading horizon Citizens Financial Group, is expected to under-perform the Alphabet. But the stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group, is 1.29 times less risky than Alphabet. The stock trades about -0.01 of its potential returns per unit of risk. The Alphabet is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8,494  in Alphabet on October 7, 2024 and sell it today you would earn a total of  1,374  from holding Alphabet or generate 16.18% return on investment over 90 days.

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

Citizens Financial Group,  vs.  Alphabet

Citizens Financial Group,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citizens Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Alphabet

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Alphabet sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Financial and Alphabet

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

The idea behind Citizens Financial Group, and Alphabet 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.