Correlation Between Waters and Citizens Financial

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

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

Diversification Opportunities for Waters and Citizens Financial

-0.06

Correlation Coefficient

Waters  Citizens Financial

Good diversification

The 3 months correlation between Waters and Citizens is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Waters 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 Waters 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 Waters 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 Waters i.e., Waters and Citizens Financial go up and down completely randomly.

Pair Corralation between Waters and Citizens Financial

Considering the 90-day investment horizon Waters is expected to generate 4.34 times more return on investment than Citizens Financial. However, Waters is 4.34 times more volatile than Citizens Financial Group,. It trades about 0.04 of its potential returns per unit of risk. Citizens Financial Group, is currently generating about 0.13 per unit of risk. If you would invest  32,020  in Waters on October 7, 2024 and sell it today you would earn a total of  5,156  from holding Waters or generate 16.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.48%
Values	Daily Returns

Waters  vs.  Citizens Financial Group,

Waters

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Waters may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Citizens Financial Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citizens Financial Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Waters and Citizens Financial

The main advantage of trading using opposite Waters and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waters 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 Waters and Citizens Financial Group, 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 Anywhere module to track or share privately all of your investments from the convenience of any device.