Correlation Between Eastern and First Republic
Can any of the company-specific risk be diversified away by investing in both Eastern 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 Eastern and First Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and First Republic Bank, you can compare the effects of market volatilities on Eastern 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 Eastern with a short position of First Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and First Republic.
Diversification Opportunities for Eastern and First Republic
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastern and First is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co 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 Eastern 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 Eastern Co 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 Eastern i.e., Eastern and First Republic go up and down completely randomly.
Pair Corralation between Eastern and First Republic
If you would invest 31.00 in First Republic Bank on August 28, 2024 and sell it today you would earn a total of 0.00 from holding First Republic Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Eastern Co vs. First Republic Bank
Performance |
| Timeline |
| Eastern |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eastern and First Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and First Republic
The main advantage of trading using opposite Eastern and First Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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 Eastern Co 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. Noble plc | First Republic vs. Nabors Industries | First Republic vs. Tenaris SA ADR | First Republic vs. The Cheesecake Factory |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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