Correlation Between First Citizens and Allstate
Can any of the company-specific risk be diversified away by investing in both First Citizens and Allstate 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 First Citizens and Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Citizens BancShares and The Allstate, you can compare the effects of market volatilities on First Citizens and Allstate 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 First Citizens with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Citizens and Allstate.
Diversification Opportunities for First Citizens and Allstate
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Allstate is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and First Citizens 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 First Citizens BancShares are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of First Citizens i.e., First Citizens and Allstate go up and down completely randomly.
Pair Corralation between First Citizens and Allstate
Assuming the 90 days horizon First Citizens BancShares is expected to generate 1.0 times more return on investment than Allstate. However, First Citizens BancShares is 1.0 times less risky than Allstate. It trades about 0.1 of its potential returns per unit of risk. The Allstate is currently generating about 0.04 per unit of risk. If you would invest 1,892 in First Citizens BancShares on September 2, 2024 and sell it today you would earn a total of 498.00 from holding First Citizens BancShares or generate 26.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Citizens BancShares vs. The Allstate
Performance |
| Timeline |
| First Citizens BancShares |
| Allstate |
First Citizens and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Citizens and Allstate
The main advantage of trading using opposite First Citizens and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Citizens position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.| First Citizens vs. Fifth Third Bancorp | First Citizens vs. Dime Community Bancshares | First Citizens vs. Fifth Third Bancorp | First Citizens vs. Northern Trust |
| Allstate vs. Brighthouse Financial | Allstate vs. First Citizens BancShares | Allstate vs. Northern Trust | Allstate vs. Dime Community Bancshares |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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