Correlation Between Citizens Financial and BankUnited

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

Diversification Opportunities for Citizens Financial and BankUnited

-0.28

Correlation Coefficient

Citizens Financial  BankUnited

Very good diversification

The 3 months correlation between Citizens and BankUnited is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Citizens Financial i.e., Citizens Financial and BankUnited go up and down completely randomly.

Pair Corralation between Citizens Financial and BankUnited

Assuming the 90 days trading horizon Citizens Financial is expected to generate 1.87 times less return on investment than BankUnited. In addition to that, Citizens Financial is 1.15 times more volatile than BankUnited. It trades about 0.07 of its total potential returns per unit of risk. BankUnited is currently generating about 0.15 per unit of volatility. If you would invest  3,808  in BankUnited on October 22, 2024 and sell it today you would earn a total of  174.00  from holding BankUnited or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Citizens Financial Group  vs.  BankUnited

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.

BankUnited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BankUnited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, BankUnited unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Financial and BankUnited

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

The idea behind Citizens Financial Group and BankUnited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.