Correlation Between Citizens Financial and GP Investments

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

Diversification Opportunities for Citizens Financial and GP Investments

0.22

Correlation Coefficient

Citizens Financial  GP Investments

Modest diversification

The 3 months correlation between Citizens and GPIV33 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments 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 GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Citizens Financial i.e., Citizens Financial and GP Investments go up and down completely randomly.

Pair Corralation between Citizens Financial and GP Investments

Assuming the 90 days trading horizon Citizens Financial Group, is expected to generate 0.81 times more return on investment than GP Investments. However, Citizens Financial Group, is 1.24 times less risky than GP Investments. It trades about 0.27 of its potential returns per unit of risk. GP Investments is currently generating about 0.06 per unit of risk. If you would invest  26,884  in Citizens Financial Group, on October 22, 2024 and sell it today you would earn a total of  2,096  from holding Citizens Financial Group, or generate 7.8% return on investment over 90 days.

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

Citizens Financial Group,  vs.  GP Investments

Citizens Financial Group,

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group, are ranked lower than 11 (%) 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.

GP Investments

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GP Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, GP Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citizens Financial and GP Investments

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

The idea behind Citizens Financial Group, and GP Investments 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.