Correlation Between Washington Federal and First Citizens

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

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

Diversification Opportunities for Washington Federal and First Citizens

-0.01

Correlation Coefficient

Washington Federal  First Citizens

Good diversification

The 3 months correlation between Washington and First is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal 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 Washington Federal 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 Washington Federal 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 Washington Federal i.e., Washington Federal and First Citizens go up and down completely randomly.

Pair Corralation between Washington Federal and First Citizens

Assuming the 90 days horizon Washington Federal is expected to generate 0.71 times more return on investment than First Citizens. However, Washington Federal is 1.4 times less risky than First Citizens. It trades about -0.08 of its potential returns per unit of risk. First Citizens BancShares is currently generating about -0.07 per unit of risk. If you would invest  1,720  in Washington Federal on December 30, 2024 and sell it today you would lose (86.00) from holding Washington Federal or give up 5.0% of portfolio value over 90 days.

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

Washington Federal  vs.  First Citizens BancShares

Washington Federal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Washington Federal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Washington Federal is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail 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. Even with latest unfluctuating performance, the Preferred Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Washington Federal and First Citizens

The main advantage of trading using opposite Washington Federal and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal 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 Washington Federal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.