Correlation Between Citizens Financial and Catalyst Bancorp

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

Diversification Opportunities for Citizens Financial and Catalyst Bancorp

0.08

Correlation Coefficient

Citizens Financial  Catalyst Bancorp

Significant diversification

The 3 months correlation between Citizens and Catalyst is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Catalyst Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Bancorp 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 Catalyst Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Catalyst Bancorp go up and down completely randomly.

Pair Corralation between Citizens Financial and Catalyst Bancorp

Assuming the 90 days trading horizon Citizens Financial Group is expected to generate 1.39 times more return on investment than Catalyst Bancorp. However, Citizens Financial is 1.39 times more volatile than Catalyst Bancorp. It trades about 0.06 of its potential returns per unit of risk. Catalyst Bancorp is currently generating about -0.01 per unit of risk. If you would invest  1,871  in Citizens Financial Group on December 30, 2024 and sell it today you would earn a total of  81.00  from holding Citizens Financial Group or generate 4.33% return on investment over 90 days.

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

Citizens Financial Group  vs.  Catalyst Bancorp

Citizens Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Catalyst Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catalyst Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Catalyst Bancorp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citizens Financial and Catalyst Bancorp

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

The idea behind Citizens Financial Group and Catalyst Bancorp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.