Correlation Between First Republic and Grupo Financiero

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Can any of the company-specific risk be diversified away by investing in both First Republic and Grupo Financiero 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 Grupo Financiero 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 Grupo Financiero Banorte, you can compare the effects of market volatilities on First Republic and Grupo Financiero 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 Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Grupo Financiero.

Diversification Opportunities for First Republic and Grupo Financiero

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between First and Grupo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Grupo Financiero Banorte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Banorte 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Banorte has no effect on the direction of First Republic i.e., First Republic and Grupo Financiero go up and down completely randomly.

Pair Corralation between First Republic and Grupo Financiero

If you would invest  13,680  in Grupo Financiero Banorte on November 3, 2024 and sell it today you would earn a total of  640.00  from holding Grupo Financiero Banorte or generate 4.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

First Republic Bank  vs.  Grupo Financiero Banorte

 Performance 
       Timeline  
First Republic Bank 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days First Republic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, First Republic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Grupo Financiero Banorte 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Banorte are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Grupo Financiero is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

First Republic and Grupo Financiero Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Republic and Grupo Financiero

The main advantage of trading using opposite First Republic and Grupo Financiero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, Grupo Financiero 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 Grupo Financiero will offset losses from the drop in Grupo Financiero's long position.
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The idea behind First Republic Bank and Grupo Financiero Banorte 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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