Correlation Between Citizens Financial and Equitable Holdings

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

Diversification Opportunities for Citizens Financial and Equitable Holdings

0.75

Correlation Coefficient

Citizens Financial  Equitable Holdings

Poor diversification

The 3 months correlation between Citizens and Equitable is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings 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 Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of Citizens Financial i.e., Citizens Financial and Equitable Holdings go up and down completely randomly.

Pair Corralation between Citizens Financial and Equitable Holdings

Assuming the 90 days trading horizon Citizens Financial Group is expected to generate 1.25 times more return on investment than Equitable Holdings. However, Citizens Financial is 1.25 times more volatile than Equitable Holdings. It trades about 0.09 of its potential returns per unit of risk. Equitable Holdings is currently generating about 0.02 per unit of risk. If you would invest  1,892  in Citizens Financial Group on December 25, 2024 and sell it today you would earn a total of  120.00  from holding Citizens Financial Group or generate 6.34% return on investment over 90 days.

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

Citizens Financial Group  vs.  Equitable Holdings

Citizens Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Citizens Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Equitable Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equitable Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Equitable Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citizens Financial and Equitable Holdings

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

The idea behind Citizens Financial Group and Equitable Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.