Correlation Between Citizens Financial and Middlebury National

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

Diversification Opportunities for Citizens Financial and Middlebury National

0.41

Correlation Coefficient

Citizens Financial  Middlebury National

Very weak diversification

The 3 months correlation between Citizens and Middlebury is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and Middlebury National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlebury National 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 Middlebury National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlebury National has no effect on the direction of Citizens Financial i.e., Citizens Financial and Middlebury National go up and down completely randomly.

Pair Corralation between Citizens Financial and Middlebury National

Considering the 90-day investment horizon Citizens Financial Group, is expected to generate 0.64 times more return on investment than Middlebury National. However, Citizens Financial Group, is 1.56 times less risky than Middlebury National. It trades about 0.32 of its potential returns per unit of risk. Middlebury National is currently generating about 0.01 per unit of risk. If you would invest  4,357  in Citizens Financial Group, on October 23, 2024 and sell it today you would earn a total of  397.00  from holding Citizens Financial Group, or generate 9.11% return on investment over 90 days.

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

Citizens Financial Group,  vs.  Middlebury National

Citizens Financial Group,

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Citizens Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Middlebury National

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Middlebury National are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Middlebury National unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Financial and Middlebury National

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

The idea behind Citizens Financial Group, and Middlebury National 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.