Correlation Between Albemarle and First Citizens

Can any of the company-specific risk be diversified away by investing in both Albemarle and First Citizens 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 Albemarle and First Citizens into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Albemarle and The First Citizens, you can compare the effects of market volatilities on Albemarle and First Citizens 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 Albemarle with a short position of First Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle and First Citizens.

Diversification Opportunities for Albemarle and First Citizens

-0.56

Correlation Coefficient

Albemarle  First Citizens

Excellent diversification

The 3 months correlation between Albemarle and First is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle and The First Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens and Albemarle 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 Albemarle are associated (or correlated) with First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens has no effect on the direction of Albemarle i.e., Albemarle and First Citizens go up and down completely randomly.

Pair Corralation between Albemarle and First Citizens

Assuming the 90 days trading horizon Albemarle is expected to generate 3.12 times more return on investment than First Citizens. However, Albemarle is 3.12 times more volatile than The First Citizens. It trades about 0.15 of its potential returns per unit of risk. The First Citizens is currently generating about 0.21 per unit of risk. If you would invest  2,913  in Albemarle on May 28, 2025 and sell it today you would earn a total of  910.00  from holding Albemarle or generate 31.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	37.1%
Values	Daily Returns

Albemarle  vs.  The First Citizens

Albemarle

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Albemarle are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Albemarle sustained solid returns over the last few months and may actually be approaching a breakup point.

First Citizens

Risk-Adjusted Performance

Solid

Over the last 90 days The First Citizens has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite unsteady fundamental indicators, First Citizens disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Albemarle and First Citizens

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

The idea behind Albemarle and The First Citizens 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.