Correlation Between CIT Group and Bank Ozk
Can any of the company-specific risk be diversified away by investing in both CIT Group and Bank Ozk 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 CIT Group and Bank Ozk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIT Group Preferred and Bank Ozk Preferred, you can compare the effects of market volatilities on CIT Group and Bank Ozk 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 CIT Group with a short position of Bank Ozk. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIT Group and Bank Ozk.
Diversification Opportunities for CIT Group and Bank Ozk
Weak diversification
The 3 months correlation between CIT and Bank is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CIT Group Preferred and Bank Ozk Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ozk Preferred and CIT Group 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 CIT Group Preferred are associated (or correlated) with Bank Ozk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ozk Preferred has no effect on the direction of CIT Group i.e., CIT Group and Bank Ozk go up and down completely randomly.
Pair Corralation between CIT Group and Bank Ozk
Assuming the 90 days horizon CIT Group is expected to generate 2.37 times less return on investment than Bank Ozk. But when comparing it to its historical volatility, CIT Group Preferred is 1.31 times less risky than Bank Ozk. It trades about 0.05 of its potential returns per unit of risk. Bank Ozk Preferred is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,582 in Bank Ozk Preferred on December 27, 2024 and sell it today you would earn a total of 97.00 from holding Bank Ozk Preferred or generate 6.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CIT Group Preferred vs. Bank Ozk Preferred
Performance |
Timeline |
CIT Group Preferred |
Bank Ozk Preferred |
CIT Group and Bank Ozk Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CIT Group and Bank Ozk
The main advantage of trading using opposite CIT Group and Bank Ozk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIT Group position performs unexpectedly, Bank Ozk 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 Bank Ozk will offset losses from the drop in Bank Ozk's long position.CIT Group vs. First Citizens BancShares | CIT Group vs. Texas Capital Bancshares | CIT Group vs. Dime Community Bancshares | CIT Group vs. Fifth Third Bancorp |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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