Correlation Between First Citizens and National Capital

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

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

Diversification Opportunities for First Citizens and National Capital

0.2

Correlation Coefficient

First Citizens  National Capital

Modest diversification

The 3 months correlation between First and National is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding The First Citizens and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank 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 The First Citizens are associated (or correlated) with National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of First Citizens i.e., First Citizens and National Capital go up and down completely randomly.

Pair Corralation between First Citizens and National Capital

Given the investment horizon of 90 days The First Citizens is expected to under-perform the National Capital. In addition to that, First Citizens is 5.68 times more volatile than National Capital Bank. It trades about -0.15 of its total potential returns per unit of risk. National Capital Bank is currently generating about -0.04 per unit of volatility. If you would invest  7,000  in National Capital Bank on May 1, 2025 and sell it today you would lose (500.00) from holding National Capital Bank or give up 7.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	66.13%
Values	Daily Returns

The First Citizens  vs.  National Capital Bank

First Citizens

Risk-Adjusted Performance

Very Weak

Over the last 90 days The First Citizens has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in August 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

National Capital Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Capital Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, National Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Citizens and National Capital

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

The idea behind The First Citizens and National Capital Bank 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.