Correlation Between Citizens Financial and OPC Energy
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and OPC Energy 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 OPC Energy 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 OPC Energy, you can compare the effects of market volatilities on Citizens Financial and OPC Energy 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 OPC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and OPC Energy.
Diversification Opportunities for Citizens Financial and OPC Energy
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citizens and OPC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and OPC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPC Energy 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 OPC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPC Energy has no effect on the direction of Citizens Financial i.e., Citizens Financial and OPC Energy go up and down completely randomly.
Pair Corralation between Citizens Financial and OPC Energy
Considering the 90-day investment horizon Citizens Financial is expected to generate 13.0 times less return on investment than OPC Energy. But when comparing it to its historical volatility, Citizens Financial Group is 1.63 times less risky than OPC Energy. It trades about 0.02 of its potential returns per unit of risk. OPC Energy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 265,000 in OPC Energy on January 26, 2024 and sell it today you would earn a total of 20,000 from holding OPC Energy or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Citizens Financial Group vs. OPC Energy
Performance |
| Timeline |
| Citizens Financial |
| OPC Energy |
Citizens Financial and OPC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and OPC Energy
The main advantage of trading using opposite Citizens Financial and OPC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, OPC Energy 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 OPC Energy will offset losses from the drop in OPC Energy's long position.| Citizens Financial vs. PNC Financial Services | Citizens Financial vs. Regions Financial | Citizens Financial vs. Fifth Third Bancorp | Citizens Financial vs. Comerica |
| OPC Energy vs. Doral Group Renewable | OPC Energy vs. Elbit Systems | OPC Energy vs. Electreon Wireless | OPC Energy vs. Delek Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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