Correlation Between Banco Do and First Citizens
Can any of the company-specific risk be diversified away by investing in both Banco Do 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 Banco Do and First Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Brasil and First Citizens BancShares, you can compare the effects of market volatilities on Banco Do 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 Banco Do with a short position of First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and First Citizens.
Diversification Opportunities for Banco Do and First Citizens
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Banco and First is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Brasil and First Citizens BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens BancShares and Banco Do 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 Banco do Brasil 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 BancShares has no effect on the direction of Banco Do i.e., Banco Do and First Citizens go up and down completely randomly.
Pair Corralation between Banco Do and First Citizens
Assuming the 90 days trading horizon Banco do Brasil is expected to under-perform the First Citizens. But the stock apears to be less risky and, when comparing its historical volatility, Banco do Brasil is 3.05 times less risky than First Citizens. The stock trades about -0.12 of its potential returns per unit of risk. The First Citizens BancShares is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 171,329 in First Citizens BancShares on September 2, 2024 and sell it today you would earn a total of 20,671 from holding First Citizens BancShares or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Banco do Brasil vs. First Citizens BancShares
Performance |
| Timeline |
| Banco do Brasil |
| First Citizens BancShares |
Banco Do and First Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and First Citizens
The main advantage of trading using opposite Banco Do and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do 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.| Banco Do vs. Banco Bradesco SA | Banco Do vs. Petrleo Brasileiro SA | Banco Do vs. Ita Unibanco Holding | Banco Do vs. Itasa Investimentos |
| First Citizens vs. First Citizens BancShares | First Citizens vs. Farmers And Merchants | First Citizens vs. Fentura Financial | First Citizens vs. First Keystone Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |