Correlation Between First Republic and First Horizon
Can any of the company-specific risk be diversified away by investing in both First Republic and First Horizon 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 First Horizon 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 First Horizon National, you can compare the effects of market volatilities on First Republic and First Horizon 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 First Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and First Horizon.
Diversification Opportunities for First Republic and First Horizon
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and First is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and First Horizon National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Horizon National 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 First Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Horizon National has no effect on the direction of First Republic i.e., First Republic and First Horizon go up and down completely randomly.
Pair Corralation between First Republic and First Horizon
Given the investment horizon of 90 days First Republic Bank is expected to under-perform the First Horizon. In addition to that, First Republic is 5.61 times more volatile than First Horizon National. It trades about -0.11 of its total potential returns per unit of risk. First Horizon National is currently generating about 0.01 per unit of volatility. If you would invest 2,255 in First Horizon National on August 27, 2024 and sell it today you would lose (162.00) from holding First Horizon National or give up 7.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.45% |
| Values | Daily Returns |
First Republic Bank vs. First Horizon National
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Horizon National |
First Republic and First Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and First Horizon
The main advantage of trading using opposite First Republic and First Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, First Horizon 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 Horizon will offset losses from the drop in First Horizon's long position.| First Republic vs. Noble plc | First Republic vs. Nabors Industries | First Republic vs. Tenaris SA ADR | First Republic vs. The Cheesecake Factory |
| First Horizon vs. Zions Bancorporation | First Horizon vs. KeyCorp | First Horizon vs. Comerica | First Horizon vs. Western Alliance Bancorporation |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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