Correlation Between Eurobank Ergasias and Citizens Financial

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

By analyzing existing cross correlation between Eurobank Ergasias Services and Citizens Financial Corp, you can compare the effects of market volatilities on Eurobank Ergasias 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 Eurobank Ergasias with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurobank Ergasias and Citizens Financial.

Diversification Opportunities for Eurobank Ergasias and Citizens Financial

0.78

Correlation Coefficient

Eurobank Ergasias  Citizens Financial

Poor diversification

The 3 months correlation between Eurobank and Citizens is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Eurobank Ergasias Services and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp and Eurobank Ergasias 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 Eurobank Ergasias Services 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 Corp has no effect on the direction of Eurobank Ergasias i.e., Eurobank Ergasias and Citizens Financial go up and down completely randomly.

Pair Corralation between Eurobank Ergasias and Citizens Financial

Assuming the 90 days horizon Eurobank Ergasias Services is expected to generate 1.65 times more return on investment than Citizens Financial. However, Eurobank Ergasias is 1.65 times more volatile than Citizens Financial Corp. It trades about 0.09 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.06 per unit of risk. If you would invest  224.00  in Eurobank Ergasias Services on December 30, 2024 and sell it today you would earn a total of  22.00  from holding Eurobank Ergasias Services or generate 9.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.3%
Values	Daily Returns

Eurobank Ergasias Services  vs.  Citizens Financial Corp

Eurobank Ergasias

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Eurobank Ergasias may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Citizens Financial Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Citizens Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Eurobank Ergasias and Citizens Financial

The main advantage of trading using opposite Eurobank Ergasias and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurobank Ergasias 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.

The idea behind Eurobank Ergasias Services and Citizens Financial Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.