Correlation Between Washington Federal and First Citizens
Can any of the company-specific risk be diversified away by investing in both Washington Federal 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 Washington Federal and First Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and First Citizens BancShares, you can compare the effects of market volatilities on Washington Federal 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 Washington Federal with a short position of First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and First Citizens.
Diversification Opportunities for Washington Federal and First Citizens
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and First is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal 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 Washington Federal 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 Washington Federal 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 Washington Federal i.e., Washington Federal and First Citizens go up and down completely randomly.
Pair Corralation between Washington Federal and First Citizens
Assuming the 90 days horizon Washington Federal is expected to generate 1.23 times more return on investment than First Citizens. However, Washington Federal is 1.23 times more volatile than First Citizens BancShares. It trades about 0.07 of its potential returns per unit of risk. First Citizens BancShares is currently generating about 0.07 per unit of risk. If you would invest 1,344 in Washington Federal on August 28, 2024 and sell it today you would earn a total of 436.00 from holding Washington Federal or generate 32.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. First Citizens BancShares
Performance |
| Timeline |
| Washington Federal |
| First Citizens BancShares |
Washington Federal and First Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and First Citizens
The main advantage of trading using opposite Washington Federal and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal 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.| Washington Federal vs. Capital One Financial | Washington Federal vs. Capital One Financial | Washington Federal vs. Bank of America |
| First Citizens vs. Fifth Third Bancorp | First Citizens vs. Dime Community Bancshares | First Citizens vs. Fifth Third Bancorp | First Citizens vs. Northern Trust |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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