Correlation Between Bank Ozk and First Citizens
Can any of the company-specific risk be diversified away by investing in both Bank Ozk and First Citizens 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 Bank Ozk and First Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Ozk Preferred and First Citizens BancShares, you can compare the effects of market volatilities on Bank Ozk and First Citizens 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 Bank Ozk with a short position of First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Ozk and First Citizens.
Diversification Opportunities for Bank Ozk and First Citizens
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ozk Preferred and First Citizens BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens BancShares and Bank Ozk 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 Bank Ozk Preferred are associated (or correlated) with First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens BancShares has no effect on the direction of Bank Ozk i.e., Bank Ozk and First Citizens go up and down completely randomly.
Pair Corralation between Bank Ozk and First Citizens
Assuming the 90 days horizon Bank Ozk Preferred is expected to generate 0.76 times more return on investment than First Citizens. However, Bank Ozk Preferred is 1.31 times less risky than First Citizens. It trades about 0.33 of its potential returns per unit of risk. First Citizens BancShares is currently generating about -0.1 per unit of risk. If you would invest 1,653 in Bank Ozk Preferred on November 5, 2024 and sell it today you would earn a total of 119.00 from holding Bank Ozk Preferred or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Ozk Preferred vs. First Citizens BancShares
Performance |
| Timeline |
| Bank Ozk Preferred |
| First Citizens BancShares |
Bank Ozk and First Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Ozk and First Citizens
The main advantage of trading using opposite Bank Ozk and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Ozk position performs unexpectedly, First Citizens 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 First Citizens will offset losses from the drop in First Citizens' long position.| Bank Ozk vs. Regions Financial | Bank Ozk vs. Huntington Bancshares Incorporated | Bank Ozk vs. Texas Capital Bancshares | Bank Ozk vs. Washington Federal |
| First Citizens vs. Fifth Third Bancorp | First Citizens vs. Huntington Bancshares Incorporated | First Citizens vs. Washington Federal | First Citizens vs. Fifth Third 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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