Correlation Between First Horizon and Customers Bancorp

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

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

Diversification Opportunities for First Horizon and Customers Bancorp

-0.84

Correlation Coefficient

First Horizon  Customers Bancorp

Pay attention - limited upside

The 3 months correlation between First and Customers is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon and Customers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Customers Bancorp and First Horizon 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 Horizon are associated (or correlated) with Customers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Customers Bancorp has no effect on the direction of First Horizon i.e., First Horizon and Customers Bancorp go up and down completely randomly.

Pair Corralation between First Horizon and Customers Bancorp

Assuming the 90 days trading horizon First Horizon is expected to generate 2.77 times less return on investment than Customers Bancorp. In addition to that, First Horizon is 1.29 times more volatile than Customers Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Customers Bancorp is currently generating about 0.03 per unit of volatility. If you would invest  2,059  in Customers Bancorp on October 11, 2024 and sell it today you would earn a total of  506.00  from holding Customers Bancorp or generate 24.58% return on investment over 90 days.

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

First Horizon  vs.  Customers Bancorp

First Horizon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Horizon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Customers Bancorp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Customers Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Customers Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Horizon and Customers Bancorp

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

The idea behind First Horizon and Customers Bancorp 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.