Correlation Between Dime Community and Citizens Financial

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

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

Diversification Opportunities for Dime Community and Citizens Financial

0.38

Correlation Coefficient

Dime Community  Citizens Financial

Weak diversification

The 3 months correlation between Dime and Citizens is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and Dime Community 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 Dime Community Bancshares 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 has no effect on the direction of Dime Community i.e., Dime Community and Citizens Financial go up and down completely randomly.

Pair Corralation between Dime Community and Citizens Financial

Assuming the 90 days horizon Dime Community Bancshares is expected to generate 1.03 times more return on investment than Citizens Financial. However, Dime Community is 1.03 times more volatile than Citizens Financial Group. It trades about 0.12 of its potential returns per unit of risk. Citizens Financial Group is currently generating about 0.01 per unit of risk. If you would invest  1,847  in Dime Community Bancshares on September 3, 2024 and sell it today you would earn a total of  147.00  from holding Dime Community Bancshares or generate 7.96% return on investment over 90 days.

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

Dime Community Bancshares  vs.  Citizens Financial Group

Dime Community Bancshares

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dime Community Bancshares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Dime Community may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Citizens Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dime Community and Citizens Financial

The main advantage of trading using opposite Dime Community and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community 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 Dime Community Bancshares 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.