Correlation Between Citizens Financial and Information Services

Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Information Services 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 Information Services 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 Information Services International Dentsu, you can compare the effects of market volatilities on Citizens Financial and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Information Services.

Diversification Opportunities for Citizens Financial and Information Services

-0.39

Correlation Coefficient

Citizens Financial  Information Services

Very good diversification

The 3 months correlation between Citizens and Information is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Information Services Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Citizens Financial i.e., Citizens Financial and Information Services go up and down completely randomly.

Pair Corralation between Citizens Financial and Information Services

Assuming the 90 days horizon Citizens Financial Group is expected to generate 0.86 times more return on investment than Information Services. However, Citizens Financial Group is 1.17 times less risky than Information Services. It trades about 0.16 of its potential returns per unit of risk. Information Services International Dentsu is currently generating about -0.03 per unit of risk. If you would invest  3,738  in Citizens Financial Group on September 5, 2024 and sell it today you would earn a total of  728.00  from holding Citizens Financial Group or generate 19.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citizens Financial Group  vs.  Information Services Internati

Citizens Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Citizens Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Information Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Information Services International Dentsu has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Information Services is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citizens Financial and Information Services

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

The idea behind Citizens Financial Group and Information Services International Dentsu 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.