Correlation Between Citizens Financial and HomeTrust Bancshares

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

Diversification Opportunities for Citizens Financial and HomeTrust Bancshares

-0.5

Correlation Coefficient

Citizens Financial  HomeTrust Bancshares

Very good diversification

The 3 months correlation between Citizens and HomeTrust is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares 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 HomeTrust Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeTrust Bancshares has no effect on the direction of Citizens Financial i.e., Citizens Financial and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between Citizens Financial and HomeTrust Bancshares

Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the HomeTrust Bancshares. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 2.21 times less risky than HomeTrust Bancshares. The preferred stock trades about -0.01 of its potential returns per unit of risk. The HomeTrust Bancshares is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,543  in HomeTrust Bancshares on September 3, 2024 and sell it today you would earn a total of  183.00  from holding HomeTrust Bancshares or generate 5.17% return on investment over 90 days.

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

Citizens Financial Group  vs.  HomeTrust Bancshares

Citizens Financial

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

HomeTrust Bancshares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HomeTrust Bancshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, HomeTrust Bancshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citizens Financial and HomeTrust Bancshares

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

The idea behind Citizens Financial Group and HomeTrust Bancshares 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.