Correlation Between CIT Group and Texas Capital
Can any of the company-specific risk be diversified away by investing in both CIT Group and Texas Capital 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 CIT Group and Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CIT Group Preferred and Texas Capital Bancshares, you can compare the effects of market volatilities on CIT Group and Texas Capital 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 CIT Group with a short position of Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIT Group and Texas Capital.
Diversification Opportunities for CIT Group and Texas Capital
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CIT and Texas is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CIT Group Preferred and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares and CIT Group 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 CIT Group Preferred are associated (or correlated) with Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of CIT Group i.e., CIT Group and Texas Capital go up and down completely randomly.
Pair Corralation between CIT Group and Texas Capital
Assuming the 90 days horizon CIT Group Preferred is expected to generate 0.91 times more return on investment than Texas Capital. However, CIT Group Preferred is 1.1 times less risky than Texas Capital. It trades about 0.0 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about -0.08 per unit of risk. If you would invest 2,411 in CIT Group Preferred on August 28, 2024 and sell it today you would lose (4.00) from holding CIT Group Preferred or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CIT Group Preferred vs. Texas Capital Bancshares
Performance |
| Timeline |
| CIT Group Preferred |
| Texas Capital Bancshares |
CIT Group and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CIT Group and Texas Capital
The main advantage of trading using opposite CIT Group and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIT Group position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's long position.| CIT Group vs. First Citizens BancShares | CIT Group vs. Texas Capital Bancshares | CIT Group vs. Dime Community Bancshares | CIT Group vs. Fifth Third Bancorp |
| Texas Capital vs. Capital One Financial | Texas Capital vs. Capital One Financial | Texas Capital vs. Bank of America |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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