Correlation Between TAL Education and Citizens Financial

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

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

Diversification Opportunities for TAL Education and Citizens Financial

0.34

Correlation Coefficient

TAL Education  Citizens Financial

Weak diversification

The 3 months correlation between TAL and Citizens is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, and TAL Education 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 TAL Education Group 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 Group, has no effect on the direction of TAL Education i.e., TAL Education and Citizens Financial go up and down completely randomly.

Pair Corralation between TAL Education and Citizens Financial

Assuming the 90 days trading horizon TAL Education is expected to generate 5.81 times less return on investment than Citizens Financial. In addition to that, TAL Education is 1.74 times more volatile than Citizens Financial Group,. It trades about 0.02 of its total potential returns per unit of risk. Citizens Financial Group, is currently generating about 0.22 per unit of volatility. If you would invest  20,412  in Citizens Financial Group, on April 20, 2025 and sell it today you would earn a total of  7,056  from holding Citizens Financial Group, or generate 34.57% return on investment over 90 days.

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

TAL Education Group  vs.  Citizens Financial Group,

TAL Education Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TAL Education Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TAL Education is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Citizens Financial Group,

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group, are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citizens Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TAL Education and Citizens Financial

The main advantage of trading using opposite TAL Education and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education 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 TAL Education Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.