Correlation Between First Citizens and Enterprise Financial

Can any of the company-specific risk be diversified away by investing in both First Citizens and Enterprise Financial 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 Enterprise Financial 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 Enterprise Financial Services, you can compare the effects of market volatilities on First Citizens and Enterprise Financial 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 Enterprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Citizens and Enterprise Financial.

Diversification Opportunities for First Citizens and Enterprise Financial

0.6

Correlation Coefficient

First Citizens  Enterprise Financial

Poor diversification

The 3 months correlation between First and Enterprise is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and Enterprise Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Financial 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 Enterprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Financial has no effect on the direction of First Citizens i.e., First Citizens and Enterprise Financial go up and down completely randomly.

Pair Corralation between First Citizens and Enterprise Financial

Assuming the 90 days horizon First Citizens BancShares is expected to generate 1.14 times more return on investment than Enterprise Financial. However, First Citizens is 1.14 times more volatile than Enterprise Financial Services. It trades about 0.12 of its potential returns per unit of risk. Enterprise Financial Services is currently generating about 0.04 per unit of risk. If you would invest  2,192  in First Citizens BancShares on September 3, 2024 and sell it today you would earn a total of  198.00  from holding First Citizens BancShares or generate 9.03% return on investment over 90 days.

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

First Citizens BancShares  vs.  Enterprise Financial Services

First Citizens BancShares

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Citizens BancShares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, First Citizens may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Enterprise Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Financial Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Enterprise Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with First Citizens and Enterprise Financial

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

The idea behind First Citizens BancShares and Enterprise Financial Services 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .