Correlation Between HomeTrust Bancshares and First Citizens

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

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

Diversification Opportunities for HomeTrust Bancshares and First Citizens

0.83

Correlation Coefficient

HomeTrust Bancshares  First Citizens

Very poor diversification

The 3 months correlation between HomeTrust and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares 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 HomeTrust Bancshares 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 HomeTrust Bancshares 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 HomeTrust Bancshares i.e., HomeTrust Bancshares and First Citizens go up and down completely randomly.

Pair Corralation between HomeTrust Bancshares and First Citizens

Given the investment horizon of 90 days HomeTrust Bancshares is expected to under-perform the First Citizens. But the stock apears to be less risky and, when comparing its historical volatility, HomeTrust Bancshares is 1.03 times less risky than First Citizens. The stock trades about -0.35 of its potential returns per unit of risk. The First Citizens BancShares is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  233,904  in First Citizens BancShares on September 25, 2024 and sell it today you would lose (18,606) from holding First Citizens BancShares or give up 7.95% of portfolio value over 90 days.

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

HomeTrust Bancshares  vs.  First Citizens BancShares

HomeTrust Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeTrust Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, HomeTrust Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

First Citizens BancShares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Citizens BancShares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, First Citizens sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HomeTrust Bancshares and First Citizens

The main advantage of trading using opposite HomeTrust Bancshares and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeTrust Bancshares 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 HomeTrust Bancshares 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.