Correlation Between Citizens Financial and Carver Bancorp

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

Diversification Opportunities for Citizens Financial and Carver Bancorp

-0.48

Correlation Coefficient

Citizens Financial  Carver Bancorp

Very good diversification

The 3 months correlation between Citizens and Carver is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and Carver Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carver 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 Carver Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carver Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Carver Bancorp go up and down completely randomly.

Pair Corralation between Citizens Financial and Carver Bancorp

Assuming the 90 days trading horizon Citizens Financial Group, is expected to under-perform the Carver Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group, is 8.56 times less risky than Carver Bancorp. The stock trades about -0.05 of its potential returns per unit of risk. The Carver Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  192.00  in Carver Bancorp on September 30, 2024 and sell it today you would lose (2.00) from holding Carver Bancorp or give up 1.04% of portfolio value over 90 days.

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

Citizens Financial Group,  vs.  Carver Bancorp

Citizens Financial Group,

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. Despite fairly strong technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Carver Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carver Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Carver Bancorp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citizens Financial and Carver Bancorp

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

The idea behind Citizens Financial Group, and Carver 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.