Correlation Between Bank of America and First Citizens
Can any of the company-specific risk be diversified away by investing in both Bank of America and First Citizens 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 Bank of America and First Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and The First Citizens, you can compare the effects of market volatilities on Bank of America and First Citizens 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 Bank of America with a short position of First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and First Citizens.
Diversification Opportunities for Bank of America and First Citizens
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and The First Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens and Bank of America 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 Bank of America are associated (or correlated) with First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens has no effect on the direction of Bank of America i.e., Bank of America and First Citizens go up and down completely randomly.
Pair Corralation between Bank of America and First Citizens
Considering the 90-day investment horizon Bank of America is expected to generate 0.92 times more return on investment than First Citizens. However, Bank of America is 1.09 times less risky than First Citizens. It trades about 0.1 of its potential returns per unit of risk. The First Citizens is currently generating about -0.02 per unit of risk. If you would invest 2,820 in Bank of America on August 31, 2024 and sell it today you would earn a total of 1,931 from holding Bank of America or generate 68.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 27.54% |
| Values | Daily Returns |
Bank of America vs. The First Citizens
Performance |
| Timeline |
| Bank of America |
| First Citizens |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and First Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and First Citizens
The main advantage of trading using opposite Bank of America and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, First Citizens 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 First Citizens will offset losses from the drop in First Citizens' long position.| Bank of America vs. RLJ Lodging Trust | Bank of America vs. Aquagold International | Bank of America vs. Stepstone Group | Bank of America vs. Morningstar Unconstrained Allocation |
| First Citizens vs. NRG Energy | First Citizens vs. Semtech | First Citizens vs. Allient | First Citizens vs. Flex |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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