Correlation Between First Citizens and Fulton Financial

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

Diversification Opportunities for First Citizens and Fulton Financial

0.64

Correlation Coefficient

First Citizens  Fulton Financial

Poor diversification

The 3 months correlation between First and Fulton is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and Fulton Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulton 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 Fulton Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulton Financial has no effect on the direction of First Citizens i.e., First Citizens and Fulton Financial go up and down completely randomly.

Pair Corralation between First Citizens and Fulton Financial

Assuming the 90 days horizon First Citizens is expected to generate 1.39 times less return on investment than Fulton Financial. In addition to that, First Citizens is 1.03 times more volatile than Fulton Financial. It trades about 0.06 of its total potential returns per unit of risk. Fulton Financial is currently generating about 0.08 per unit of volatility. If you would invest  1,870  in Fulton Financial on September 3, 2024 and sell it today you would earn a total of  199.00  from holding Fulton Financial or generate 10.64% 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.  Fulton Financial

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. 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.

Fulton Financial

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fulton Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fulton Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Citizens and Fulton Financial

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

The idea behind First Citizens BancShares and Fulton Financial 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.

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.