Correlation Between Citizens Financial and Athene Holding

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

Diversification Opportunities for Citizens Financial and Athene Holding

0.9

Correlation Coefficient

Citizens Financial  Athene Holding

Almost no diversification

The 3 months correlation between Citizens and Athene is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Athene Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athene Holding 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 Athene Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athene Holding has no effect on the direction of Citizens Financial i.e., Citizens Financial and Athene Holding go up and down completely randomly.

Pair Corralation between Citizens Financial and Athene Holding

Assuming the 90 days trading horizon Citizens Financial Group is expected to generate 0.89 times more return on investment than Athene Holding. However, Citizens Financial Group is 1.12 times less risky than Athene Holding. It trades about -0.04 of its potential returns per unit of risk. Athene Holding is currently generating about -0.09 per unit of risk. If you would invest  2,037  in Citizens Financial Group on October 8, 2024 and sell it today you would lose (21.00) from holding Citizens Financial Group or give up 1.03% of portfolio value over 90 days.

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

Citizens Financial Group  vs.  Athene Holding

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.

Athene Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athene Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Athene Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citizens Financial and Athene Holding

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

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