Correlation Between Citizens Financial and Cgrowth Capital

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

Diversification Opportunities for Citizens Financial and Cgrowth Capital

0.52

Correlation Coefficient

Citizens Financial  Cgrowth Capital

Very weak diversification

The 3 months correlation between Citizens and Cgrowth is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and Cgrowth Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cgrowth Capital 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 Cgrowth Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cgrowth Capital has no effect on the direction of Citizens Financial i.e., Citizens Financial and Cgrowth Capital go up and down completely randomly.

Pair Corralation between Citizens Financial and Cgrowth Capital

Given the investment horizon of 90 days Citizens Financial is expected to generate 9.3 times less return on investment than Cgrowth Capital. But when comparing it to its historical volatility, Citizens Financial Corp is 8.56 times less risky than Cgrowth Capital. It trades about 0.12 of its potential returns per unit of risk. Cgrowth Capital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.20  in Cgrowth Capital on September 26, 2024 and sell it today you would earn a total of  0.10  from holding Cgrowth Capital or generate 50.0% return on investment over 90 days.

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

Citizens Financial Corp  vs.  Cgrowth Capital

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.

Cgrowth Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cgrowth Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Cgrowth Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Financial and Cgrowth Capital

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

The idea behind Citizens Financial Corp and Cgrowth Capital 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.