Correlation Between Citizens Financial and BNP Paribas

Can any of the company-specific risk be diversified away by investing in both Citizens Financial and BNP Paribas 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 BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citizens Financial Corp and BNP Paribas SA, you can compare the effects of market volatilities on Citizens Financial and BNP Paribas 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 BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and BNP Paribas.

Diversification Opportunities for Citizens Financial and BNP Paribas

-0.76

Correlation Coefficient

Citizens Financial  BNP Paribas

Pay attention - limited upside

The 3 months correlation between Citizens and BNP is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA 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 Corp are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of Citizens Financial i.e., Citizens Financial and BNP Paribas go up and down completely randomly.

Pair Corralation between Citizens Financial and BNP Paribas

Given the investment horizon of 90 days Citizens Financial Corp is expected to under-perform the BNP Paribas. In addition to that, Citizens Financial is 1.18 times more volatile than BNP Paribas SA. It trades about -0.09 of its total potential returns per unit of risk. BNP Paribas SA is currently generating about 0.03 per unit of volatility. If you would invest  2,979  in BNP Paribas SA on September 23, 2024 and sell it today you would earn a total of  18.00  from holding BNP Paribas SA or generate 0.6% return on investment over 90 days.

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

Citizens Financial Corp  vs.  BNP Paribas SA

Citizens Financial Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Citizens Financial showed solid returns over the last few months and may actually be approaching a breakup point.

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citizens Financial and BNP Paribas

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

The idea behind Citizens Financial Corp and BNP Paribas SA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.