Correlation Between Citizens Financial and Trustmark

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

Diversification Opportunities for Citizens Financial and Trustmark

-0.73

Correlation Coefficient

Citizens Financial  Trustmark

Pay attention - limited upside

The 3 months correlation between Citizens and Trustmark is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Trustmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trustmark 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 Trustmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trustmark has no effect on the direction of Citizens Financial i.e., Citizens Financial and Trustmark go up and down completely randomly.

Pair Corralation between Citizens Financial and Trustmark

Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Trustmark. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 2.35 times less risky than Trustmark. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Trustmark is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,229  in Trustmark on September 23, 2024 and sell it today you would earn a total of  342.00  from holding Trustmark or generate 10.59% 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.  Trustmark

Citizens Financial

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. In spite of latest weak performance, the Preferred Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Trustmark

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Citizens Financial and Trustmark

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

The idea behind Citizens Financial Group and Trustmark 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.