Correlation Between Fulton Financial and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Fulton Financial 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 Fulton Financial and Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulton Financial and Texas Capital Bancshares, you can compare the effects of market volatilities on Fulton Financial 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 Fulton Financial with a short position of Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulton Financial and Texas Capital.
Diversification Opportunities for Fulton Financial and Texas Capital
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fulton and Texas is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fulton Financial 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 Fulton Financial 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 Fulton Financial 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 Fulton Financial i.e., Fulton Financial and Texas Capital go up and down completely randomly.
Pair Corralation between Fulton Financial and Texas Capital
Assuming the 90 days horizon Fulton Financial is expected to under-perform the Texas Capital. But the preferred stock apears to be less risky and, when comparing its historical volatility, Fulton Financial is 1.26 times less risky than Texas Capital. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Texas Capital Bancshares is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,102 in Texas Capital Bancshares on August 24, 2024 and sell it today you would earn a total of 3.00 from holding Texas Capital Bancshares or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fulton Financial vs. Texas Capital Bancshares
Performance |
| Timeline |
| Fulton Financial |
| Texas Capital Bancshares |
Fulton Financial and Texas Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulton Financial and Texas Capital
The main advantage of trading using opposite Fulton Financial and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulton Financial 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.| Fulton Financial vs. First Citizens BancShares | Fulton Financial vs. Fifth Third Bancorp | Fulton Financial vs. Dime Community Bancshares | Fulton Financial vs. Heartland Financial USA |
| Texas Capital vs. Washington Federal | Texas Capital vs. First Citizens BancShares | Texas Capital vs. Dime Community Bancshares | Texas Capital vs. Pinnacle Financial Partners |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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