Correlation Between Citizens Financial and Texas Community

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

Diversification Opportunities for Citizens Financial and Texas Community

-0.47

Correlation Coefficient

Citizens Financial  Texas Community

Very good diversification

The 3 months correlation between Citizens and Texas is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Texas Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Community Banc 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 Texas Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Community Banc has no effect on the direction of Citizens Financial i.e., Citizens Financial and Texas Community go up and down completely randomly.

Pair Corralation between Citizens Financial and Texas Community

Assuming the 90 days trading horizon Citizens Financial Group is expected to generate 0.88 times more return on investment than Texas Community. However, Citizens Financial Group is 1.14 times less risky than Texas Community. It trades about 0.03 of its potential returns per unit of risk. Texas Community Bancshares is currently generating about 0.01 per unit of risk. If you would invest  1,744  in Citizens Financial Group on September 14, 2024 and sell it today you would earn a total of  312.00  from holding Citizens Financial Group or generate 17.89% 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.  Texas Community Bancshares

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.

Texas Community Banc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Community Bancshares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Texas Community is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citizens Financial and Texas Community

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

The idea behind Citizens Financial Group and Texas Community 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.

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.