Correlation Between Comerica and First Citizens

Can any of the company-specific risk be diversified away by investing in both Comerica 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 Comerica and First Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Comerica and First Citizens BancShares, you can compare the effects of market volatilities on Comerica 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 Comerica with a short position of First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comerica and First Citizens.

Diversification Opportunities for Comerica and First Citizens

0.79

Correlation Coefficient

Comerica  First Citizens

Poor diversification

The 3 months correlation between Comerica and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Comerica 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 Comerica 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 Comerica 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 Comerica i.e., Comerica and First Citizens go up and down completely randomly.

Pair Corralation between Comerica and First Citizens

Considering the 90-day investment horizon Comerica is expected to generate 0.98 times more return on investment than First Citizens. However, Comerica is 1.02 times less risky than First Citizens. It trades about -0.02 of its potential returns per unit of risk. First Citizens BancShares is currently generating about -0.11 per unit of risk. If you would invest  6,068  in Comerica on December 28, 2024 and sell it today you would lose (225.00) from holding Comerica or give up 3.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Comerica  vs.  First Citizens BancShares

Comerica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comerica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Comerica is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

First Citizens BancShares

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Citizens BancShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Comerica and First Citizens

The main advantage of trading using opposite Comerica and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comerica 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.

The idea behind Comerica and First Citizens BancShares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.