Correlation Between First Citizens and US Bancorp
Can any of the company-specific risk be diversified away by investing in both First Citizens and US Bancorp 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 US Bancorp 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 US Bancorp, you can compare the effects of market volatilities on First Citizens and US Bancorp 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 US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Citizens and US Bancorp.
Diversification Opportunities for First Citizens and US Bancorp
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and USB-PH is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of First Citizens i.e., First Citizens and US Bancorp go up and down completely randomly.
Pair Corralation between First Citizens and US Bancorp
Assuming the 90 days horizon First Citizens BancShares is expected to generate 1.95 times more return on investment than US Bancorp. However, First Citizens is 1.95 times more volatile than US Bancorp. It trades about 0.04 of its potential returns per unit of risk. US Bancorp is currently generating about 0.04 per unit of risk. If you would invest 2,122 in First Citizens BancShares on October 1, 2024 and sell it today you would earn a total of 100.00 from holding First Citizens BancShares or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Citizens BancShares vs. US Bancorp
Performance |
| Timeline |
| First Citizens BancShares |
| US Bancorp |
First Citizens and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Citizens and US Bancorp
The main advantage of trading using opposite First Citizens and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Citizens position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp'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 |
| US Bancorp vs. US Bancorp PERP | US Bancorp vs. KeyCorp | US Bancorp vs. KeyCorp | US Bancorp vs. Regions Financial |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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