Correlation Between First Citizens and Prosperity Bancshares
Can any of the company-specific risk be diversified away by investing in both First Citizens and Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares, you can compare the effects of market volatilities on First Citizens and Prosperity Bancshares 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 Prosperity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Citizens and Prosperity Bancshares.
Diversification Opportunities for First Citizens and Prosperity Bancshares
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Prosperity is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and Prosperity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosperity Bancshares 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 Prosperity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosperity Bancshares has no effect on the direction of First Citizens i.e., First Citizens and Prosperity Bancshares go up and down completely randomly.
Pair Corralation between First Citizens and Prosperity Bancshares
Assuming the 90 days horizon First Citizens BancShares is expected to generate 1.82 times more return on investment than Prosperity Bancshares. However, First Citizens is 1.82 times more volatile than Prosperity Bancshares. It trades about 0.07 of its potential returns per unit of risk. Prosperity Bancshares is currently generating about 0.01 per unit of risk. If you would invest 64,735 in First Citizens BancShares on January 26, 2024 and sell it today you would earn a total of 99,228 from holding First Citizens BancShares or generate 153.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Citizens BancShares vs. Prosperity Bancshares
Performance |
| Timeline |
| First Citizens BancShares |
| Prosperity Bancshares |
First Citizens and Prosperity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Citizens and Prosperity Bancshares
The main advantage of trading using opposite First Citizens and Prosperity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Citizens position performs unexpectedly, Prosperity Bancshares 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 Prosperity Bancshares will offset losses from the drop in Prosperity Bancshares' long position.| First Citizens vs. Zions Bancorporation | First Citizens vs. KeyCorp | First Citizens vs. Comerica | First Citizens vs. First Horizon National |
| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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