Correlation Between BRP and First Republic
Can any of the company-specific risk be diversified away by investing in both BRP and First Republic 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 BRP and First Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRP Inc and First Republic Bank, you can compare the effects of market volatilities on BRP and First Republic 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 BRP with a short position of First Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRP and First Republic.
Diversification Opportunities for BRP and First Republic
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BRP and First is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and First Republic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Republic Bank and BRP 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 BRP Inc are associated (or correlated) with First Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Republic Bank has no effect on the direction of BRP i.e., BRP and First Republic go up and down completely randomly.
Pair Corralation between BRP and First Republic
Given the investment horizon of 90 days BRP Inc is expected to under-perform the First Republic. But the stock apears to be less risky and, when comparing its historical volatility, BRP Inc is 18.8 times less risky than First Republic. The stock trades about -0.04 of its potential returns per unit of risk. The First Republic Bank is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.50 in First Republic Bank on September 12, 2024 and sell it today you would lose (0.48) from holding First Republic Bank or give up 96.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 6.17% |
| Values | Daily Returns |
BRP Inc vs. First Republic Bank
Performance |
| Timeline |
| BRP Inc |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BRP and First Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRP and First Republic
The main advantage of trading using opposite BRP and First Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRP position performs unexpectedly, First Republic 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 Republic will offset losses from the drop in First Republic's long position.The idea behind BRP Inc and First Republic 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.| First Republic vs. SunOpta | First Republic vs. Weyco Group | First Republic vs. Pool Corporation | First Republic vs. Lululemon Athletica |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |