Correlation Between First Citizens and Thrivent Partner
Can any of the company-specific risk be diversified away by investing in both First Citizens and Thrivent Partner 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 Thrivent Partner 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 Thrivent Partner Worldwide, you can compare the effects of market volatilities on First Citizens and Thrivent Partner 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 Thrivent Partner. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Citizens and Thrivent Partner.
Diversification Opportunities for First Citizens and Thrivent Partner
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Thrivent is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and Thrivent Partner Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Partner Wor 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 Thrivent Partner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Partner Wor has no effect on the direction of First Citizens i.e., First Citizens and Thrivent Partner go up and down completely randomly.
Pair Corralation between First Citizens and Thrivent Partner
Assuming the 90 days horizon First Citizens BancShares is expected to generate 2.03 times more return on investment than Thrivent Partner. However, First Citizens is 2.03 times more volatile than Thrivent Partner Worldwide. It trades about -0.03 of its potential returns per unit of risk. Thrivent Partner Worldwide is currently generating about -0.26 per unit of risk. If you would invest 154,944 in First Citizens BancShares on January 18, 2024 and sell it today you would lose (1,693) from holding First Citizens BancShares or give up 1.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
First Citizens BancShares vs. Thrivent Partner Worldwide
Performance |
Timeline |
First Citizens BancShares |
Thrivent Partner Wor |
First Citizens and Thrivent Partner Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Citizens and Thrivent Partner
The main advantage of trading using opposite First Citizens and Thrivent Partner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Citizens position performs unexpectedly, Thrivent Partner 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 Thrivent Partner will offset losses from the drop in Thrivent Partner's long position.The idea behind First Citizens BancShares and Thrivent Partner Worldwide 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.Thrivent Partner vs. Thrivent Large Cap | Thrivent Partner vs. Thrivent Limited Maturity | Thrivent Partner vs. Thrivent Moderate Allocation | Thrivent Partner vs. Thrivent High Income |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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