Correlation Between First Citizens and Northern Trust
Can any of the company-specific risk be diversified away by investing in both First Citizens and Northern Trust 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 Northern Trust 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 Northern Trust, you can compare the effects of market volatilities on First Citizens and Northern Trust 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 Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Citizens and Northern Trust.
Diversification Opportunities for First Citizens and Northern Trust
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Northern is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust 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 Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of First Citizens i.e., First Citizens and Northern Trust go up and down completely randomly.
Pair Corralation between First Citizens and Northern Trust
Assuming the 90 days horizon First Citizens BancShares is expected to generate 1.29 times more return on investment than Northern Trust. However, First Citizens is 1.29 times more volatile than Northern Trust. It trades about -0.01 of its potential returns per unit of risk. Northern Trust is currently generating about -0.16 per unit of risk. If you would invest 2,359 in First Citizens BancShares on August 27, 2024 and sell it today you would lose (13.00) from holding First Citizens BancShares or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Citizens BancShares vs. Northern Trust
Performance |
| Timeline |
| First Citizens BancShares |
| Northern Trust |
First Citizens and Northern Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Citizens and Northern Trust
The main advantage of trading using opposite First Citizens and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Citizens position performs unexpectedly, Northern Trust 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 Northern Trust will offset losses from the drop in Northern Trust'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 |
| Northern Trust vs. Fifth Third Bancorp | Northern Trust vs. First Citizens BancShares | Northern Trust vs. Arch Capital Group | Northern Trust vs. Merchants Bancorp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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