Correlation Between Citizens Financial and Huntington Bancshares

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

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

Diversification Opportunities for Citizens Financial and Huntington Bancshares

0.99

Correlation Coefficient

Citizens Financial  Huntington Bancshares

No risk reduction

The 3 months correlation between Citizens and Huntington is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Huntington Bancshares Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Bancshares 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 Group are associated (or correlated) with Huntington Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Bancshares has no effect on the direction of Citizens Financial i.e., Citizens Financial and Huntington Bancshares go up and down completely randomly.

Pair Corralation between Citizens Financial and Huntington Bancshares

Assuming the 90 days horizon Citizens Financial is expected to generate 1.5 times less return on investment than Huntington Bancshares. But when comparing it to its historical volatility, Citizens Financial Group is 1.07 times less risky than Huntington Bancshares. It trades about 0.09 of its potential returns per unit of risk. Huntington Bancshares Incorporated is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,310  in Huntington Bancshares Incorporated on September 23, 2024 and sell it today you would earn a total of  209.00  from holding Huntington Bancshares Incorporated or generate 15.95% return on investment over 90 days.

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

Citizens Financial Group  vs.  Huntington Bancshares Incorpor

Citizens Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Citizens Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Huntington Bancshares

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Bancshares Incorporated are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Huntington Bancshares reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Financial and Huntington Bancshares

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

The idea behind Citizens Financial Group and Huntington Bancshares Incorporated 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.