Correlation Between First Citizens and National Bank

Can any of the company-specific risk be diversified away by investing in both First Citizens and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on First Citizens and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Citizens and National Bank.

Diversification Opportunities for First Citizens and National Bank

-0.85

Correlation Coefficient

First Citizens  National Bank

Pay attention - limited upside

The 3 months correlation between First and National is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of First Citizens i.e., First Citizens and National Bank go up and down completely randomly.

Pair Corralation between First Citizens and National Bank

Assuming the 90 days horizon First Citizens BancShares is expected to under-perform the National Bank. But the stock apears to be less risky and, when comparing its historical volatility, First Citizens BancShares is 1.04 times less risky than National Bank. The stock trades about -0.11 of its potential returns per unit of risk. The National Bank of is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  792.00  in National Bank of on December 29, 2024 and sell it today you would earn a total of  258.00  from holding National Bank of or generate 32.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

First Citizens BancShares  vs.  National Bank of

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.

National Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Citizens and National Bank

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

The idea behind First Citizens BancShares and National Bank of 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.