Correlation Between Citizens Financial and Heartland Financial

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

Diversification Opportunities for Citizens Financial and Heartland Financial

0.85

Correlation Coefficient

Citizens Financial  Heartland Financial

Very poor diversification

The 3 months correlation between Citizens and Heartland is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA 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 Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of Citizens Financial i.e., Citizens Financial and Heartland Financial go up and down completely randomly.

Pair Corralation between Citizens Financial and Heartland Financial

Assuming the 90 days trading horizon Citizens Financial Group, is expected to generate 0.34 times more return on investment than Heartland Financial. However, Citizens Financial Group, is 2.95 times less risky than Heartland Financial. It trades about 0.2 of its potential returns per unit of risk. Heartland Financial USA is currently generating about 0.03 per unit of risk. If you would invest  2,455  in Citizens Financial Group, on August 9, 2024 and sell it today you would earn a total of  279.00  from holding Citizens Financial Group, or generate 11.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	24.29%
Values	Daily Returns

Citizens Financial Group,  vs.  Heartland Financial USA

Citizens Financial Group,

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group, are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Citizens Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Heartland Financial USA

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Financial USA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Heartland Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citizens Financial and Heartland Financial

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

The idea behind Citizens Financial Group, and Heartland Financial USA 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.