Correlation Between Citizens Financial and International Bancshares

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

Diversification Opportunities for Citizens Financial and International Bancshares

0.58

Correlation Coefficient

Citizens Financial  International Bancshares

Very weak diversification

The 3 months correlation between Citizens and International is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and International Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International 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 International Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Bancshares has no effect on the direction of Citizens Financial i.e., Citizens Financial and International Bancshares go up and down completely randomly.

Pair Corralation between Citizens Financial and International Bancshares

Considering the 90-day investment horizon Citizens Financial Group, is expected to generate 1.04 times more return on investment than International Bancshares. However, Citizens Financial is 1.04 times more volatile than International Bancshares. It trades about -0.01 of its potential returns per unit of risk. International Bancshares is currently generating about -0.07 per unit of risk. If you would invest  4,667  in Citizens Financial Group, on December 2, 2024 and sell it today you would lose (90.00) from holding Citizens Financial Group, or give up 1.93% of portfolio value over 90 days.

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

Citizens Financial Group,  vs.  International Bancshares

Citizens Financial Group,

Risk-Adjusted Performance

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 nearly stable technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

International Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Citizens Financial and International Bancshares

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

The idea behind Citizens Financial Group, and International 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.