Correlation Between PACCAR and First Citizens

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

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

Diversification Opportunities for PACCAR and First Citizens

-0.61

Correlation Coefficient

PACCAR  First Citizens

Excellent diversification

The 3 months correlation between PACCAR and First is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and The First Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens and PACCAR 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 PACCAR Inc 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 PACCAR i.e., PACCAR and First Citizens go up and down completely randomly.

Pair Corralation between PACCAR and First Citizens

Given the investment horizon of 90 days PACCAR Inc is expected to generate 0.12 times more return on investment than First Citizens. However, PACCAR Inc is 8.26 times less risky than First Citizens. It trades about 0.08 of its potential returns per unit of risk. The First Citizens is currently generating about -0.16 per unit of risk. If you would invest  9,125  in PACCAR Inc on May 8, 2025 and sell it today you would earn a total of  695.00  from holding PACCAR Inc or generate 7.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	58.06%
Values	Daily Returns

PACCAR Inc  vs.  The First Citizens

PACCAR Inc

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, PACCAR may actually be approaching a critical reversion point that can send shares even higher in September 2025.

First Citizens

Risk-Adjusted Performance

Weakest

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

Pair Trading with PACCAR and First Citizens

The main advantage of trading using opposite PACCAR and First Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR 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 PACCAR Inc 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.