Correlation Between First Republic and United States
Can any of the company-specific risk be diversified away by investing in both First Republic and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on First Republic and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and United States.
Diversification Opportunities for First Republic and United States
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of First Republic i.e., First Republic and United States go up and down completely randomly.
Pair Corralation between First Republic and United States
Assuming the 90 days trading horizon First Republic Bank is expected to under-perform the United States. In addition to that, First Republic is 1.76 times more volatile than United States Steel. It trades about -0.08 of its total potential returns per unit of risk. United States Steel is currently generating about 0.05 per unit of volatility. If you would invest 51,108 in United States Steel on August 29, 2024 and sell it today you would earn a total of 31,717 from holding United States Steel or generate 62.06% 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. United States Steel
Performance |
| Timeline |
| First Republic Bank |
| United States Steel |
First Republic and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and United States
The main advantage of trading using opposite First Republic and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| First Republic vs. First Majestic Silver | First Republic vs. Ameriprise Financial | First Republic vs. McEwen Mining | First Republic vs. Lloyds Banking Group |
| United States vs. The Select Sector | United States vs. Promotora y Operadora | United States vs. iShares Global Timber | United States vs. SPDR Series Trust |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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