Correlation Between Citizens Financial and OSX Brasil

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

Diversification Opportunities for Citizens Financial and OSX Brasil

0.57

Correlation Coefficient

Citizens Financial  OSX Brasil

Very weak diversification

The 3 months correlation between Citizens and OSX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and OSX Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSX Brasil SA 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 OSX Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSX Brasil SA has no effect on the direction of Citizens Financial i.e., Citizens Financial and OSX Brasil go up and down completely randomly.

Pair Corralation between Citizens Financial and OSX Brasil

Assuming the 90 days trading horizon Citizens Financial Group, is expected to generate 0.53 times more return on investment than OSX Brasil. However, Citizens Financial Group, is 1.9 times less risky than OSX Brasil. It trades about -0.1 of its potential returns per unit of risk. OSX Brasil SA is currently generating about -0.05 per unit of risk. If you would invest  26,714  in Citizens Financial Group, on December 23, 2024 and sell it today you would lose (2,314) from holding Citizens Financial Group, or give up 8.66% of portfolio value over 90 days.

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

Citizens Financial Group,  vs.  OSX Brasil SA

Citizens Financial Group,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Financial Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

OSX Brasil SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days OSX Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Citizens Financial and OSX Brasil

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

The idea behind Citizens Financial Group, and OSX Brasil SA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.