Correlation Between First Republic and New Oriental
Can any of the company-specific risk be diversified away by investing in both First Republic and New Oriental 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 Republic and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Republic Bank and New Oriental Education, you can compare the effects of market volatilities on First Republic and New Oriental 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 Republic with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and New Oriental.
Diversification Opportunities for First Republic and New Oriental
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education and First Republic 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 First Republic Bank are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of First Republic i.e., First Republic and New Oriental go up and down completely randomly.
Pair Corralation between First Republic and New Oriental
Assuming the 90 days trading horizon First Republic Bank is expected to under-perform the New Oriental. In addition to that, First Republic is 2.3 times more volatile than New Oriental Education. It trades about -0.08 of its total potential returns per unit of risk. New Oriental Education is currently generating about 0.05 per unit of volatility. If you would invest 81,963 in New Oriental Education on October 25, 2024 and sell it today you would earn a total of 43,371 from holding New Oriental Education or generate 52.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Republic Bank vs. New Oriental Education
Performance |
| Timeline |
| First Republic Bank |
| New Oriental Education |
First Republic and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and New Oriental
The main advantage of trading using opposite First Republic and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| First Republic vs. Grupo Financiero Banorte | First Republic vs. Grupo Financiero Inbursa | First Republic vs. Banco del Bajo | First Republic vs. Fibra Mty SAPI |
| New Oriental vs. Lloyds Banking Group | New Oriental vs. First Republic Bank | New Oriental vs. Cognizant Technology Solutions | New Oriental vs. Deutsche Bank Aktiengesellschaft |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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