Correlation Between First Citizens and Generations Bancorp

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

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

Diversification Opportunities for First Citizens and Generations Bancorp

0.23

Correlation Coefficient

First Citizens  Generations Bancorp

Modest diversification

The 3 months correlation between First and Generations is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and Generations Bancorp NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generations Bancorp and First Citizens 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 First Citizens BancShares are associated (or correlated) with Generations Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generations Bancorp has no effect on the direction of First Citizens i.e., First Citizens and Generations Bancorp go up and down completely randomly.

Pair Corralation between First Citizens and Generations Bancorp

Assuming the 90 days horizon First Citizens is expected to generate 27.26 times less return on investment than Generations Bancorp. But when comparing it to its historical volatility, First Citizens BancShares is 3.94 times less risky than Generations Bancorp. It trades about 0.03 of its potential returns per unit of risk. Generations Bancorp NY is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,175  in Generations Bancorp NY on September 20, 2024 and sell it today you would earn a total of  369.00  from holding Generations Bancorp NY or generate 31.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	20.63%
Values	Daily Returns

First Citizens BancShares  vs.  Generations Bancorp NY

First Citizens BancShares

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Citizens BancShares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, First Citizens is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Generations Bancorp

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Generations Bancorp NY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Generations Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Citizens and Generations Bancorp

The main advantage of trading using opposite First Citizens and Generations Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Citizens position performs unexpectedly, Generations Bancorp 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 Generations Bancorp will offset losses from the drop in Generations Bancorp's long position.

The idea behind First Citizens BancShares and Generations Bancorp NY 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.