Correlation Between Citizens Financial and Southern California
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Southern California 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 Southern California 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 Southern California Bancorp, you can compare the effects of market volatilities on Citizens Financial and Southern California 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 Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Southern California.
Diversification Opportunities for Citizens Financial and Southern California
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citizens and Southern is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Southern California Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California 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 Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California has no effect on the direction of Citizens Financial i.e., Citizens Financial and Southern California go up and down completely randomly.
Pair Corralation between Citizens Financial and Southern California
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Southern California. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 1.88 times less risky than Southern California. The preferred stock trades about -0.13 of its potential returns per unit of risk. The Southern California Bancorp is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,522 in Southern California Bancorp on September 6, 2024 and sell it today you would earn a total of 244.00 from holding Southern California Bancorp or generate 16.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Citizens Financial Group vs. Southern California Bancorp
Performance |
Timeline |
Citizens Financial |
Southern California |
Citizens Financial and Southern California Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citizens Financial and Southern California
The main advantage of trading using opposite Citizens Financial and Southern California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Southern California 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 Southern California will offset losses from the drop in Southern California's long position.Citizens Financial vs. Old National Bancorp | Citizens Financial vs. Pinnacle Financial Partners | Citizens Financial vs. Heartland Financial USA | Citizens Financial vs. OceanFirst Financial Corp |
Southern California vs. Avidbank Holdings | Southern California vs. American Riviera Bank | Southern California vs. American Business Bk | Southern California vs. Private Bancorp of |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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