Correlation Between New Oriental and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both New Oriental and Citizens Financial 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 New Oriental and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Citizens Financial Group,, you can compare the effects of market volatilities on New Oriental and Citizens Financial 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 New Oriental with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Citizens Financial.
Diversification Opportunities for New Oriental and Citizens Financial
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Citizens is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, and New Oriental 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 New Oriental Education are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of New Oriental i.e., New Oriental and Citizens Financial go up and down completely randomly.
Pair Corralation between New Oriental and Citizens Financial
Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Citizens Financial. In addition to that, New Oriental is 1.22 times more volatile than Citizens Financial Group,. It trades about -0.13 of its total potential returns per unit of risk. Citizens Financial Group, is currently generating about 0.27 per unit of volatility. If you would invest 26,884 in Citizens Financial Group, on October 23, 2024 and sell it today you would earn a total of 2,096 from holding Citizens Financial Group, or generate 7.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
New Oriental Education vs. Citizens Financial Group,
Performance |
Timeline |
New Oriental Education |
Citizens Financial Group, |
New Oriental and Citizens Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Oriental and Citizens Financial
The main advantage of trading using opposite New Oriental and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.New Oriental vs. TAL Education Group | New Oriental vs. Cogna Educao SA | New Oriental vs. Yduqs Participaes SA | New Oriental vs. GAEC Educacao SA |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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