Correlation Between Texas Capital and Fulton Financial
Can any of the company-specific risk be diversified away by investing in both Texas Capital and Fulton Financial 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 Texas Capital and Fulton Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Capital Bancshares and Fulton Financial, you can compare the effects of market volatilities on Texas Capital and Fulton Financial 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 Texas Capital with a short position of Fulton Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Capital and Fulton Financial.
Diversification Opportunities for Texas Capital and Fulton Financial
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Texas and Fulton is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Texas Capital Bancshares and Fulton Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulton Financial and Texas Capital 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 Texas Capital Bancshares are associated (or correlated) with Fulton Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulton Financial has no effect on the direction of Texas Capital i.e., Texas Capital and Fulton Financial go up and down completely randomly.
Pair Corralation between Texas Capital and Fulton Financial
Assuming the 90 days horizon Texas Capital Bancshares is expected to generate 1.26 times more return on investment than Fulton Financial. However, Texas Capital is 1.26 times more volatile than Fulton Financial. It trades about 0.01 of its potential returns per unit of risk. Fulton Financial is currently generating about -0.09 per unit of risk. 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 |
Texas Capital Bancshares vs. Fulton Financial
Performance |
| Timeline |
| Texas Capital Bancshares |
| Fulton Financial |
Texas Capital and Fulton Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Capital and Fulton Financial
The main advantage of trading using opposite Texas Capital and Fulton Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Capital position performs unexpectedly, Fulton Financial 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 Fulton Financial will offset losses from the drop in Fulton Financial's long position.| Texas Capital vs. Washington Federal | Texas Capital vs. First Citizens BancShares | Texas Capital vs. Dime Community Bancshares | Texas Capital vs. Pinnacle Financial Partners |
| Fulton Financial vs. First Citizens BancShares | Fulton Financial vs. Fifth Third Bancorp | Fulton Financial vs. Dime Community Bancshares | Fulton Financial vs. Heartland Financial USA |
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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