Correlation Between First Citizens and Kohls Corp

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

Diversification Opportunities for First Citizens and Kohls Corp

-0.19

Correlation Coefficient

First Citizens  Kohls Corp

Good diversification

The 3 months correlation between First and Kohls is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Citizens BancShares and Kohls Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohls Corp 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 Kohls Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohls Corp has no effect on the direction of First Citizens i.e., First Citizens and Kohls Corp go up and down completely randomly.

Pair Corralation between First Citizens and Kohls Corp

Assuming the 90 days horizon First Citizens BancShares is expected to generate 0.89 times more return on investment than Kohls Corp. However, First Citizens BancShares is 1.13 times less risky than Kohls Corp. It trades about 0.13 of its potential returns per unit of risk. Kohls Corp is currently generating about -0.04 per unit of risk. If you would invest  159,457  in First Citizens BancShares on February 5, 2024 and sell it today you would earn a total of  11,543  from holding First Citizens BancShares or generate 7.24% 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.  Kohls Corp

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. Despite somewhat weak fundamental indicators, First Citizens may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Kohls Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kohls Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kohls Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First Citizens and Kohls Corp

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

The idea behind First Citizens BancShares and Kohls Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.