Correlation Between First Republic and First Capital
Can any of the company-specific risk be diversified away by investing in both First Republic and First Capital 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 Capital 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 Capital, you can compare the effects of market volatilities on First Republic and First Capital 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 Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and First Capital.
Diversification Opportunities for First Republic and First Capital
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and First is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital 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 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of First Republic i.e., First Republic and First Capital go up and down completely randomly.
Pair Corralation between First Republic and First Capital
Assuming the 90 days horizon First Republic Bank is expected to under-perform the First Capital. In addition to that, First Republic is 12.73 times more volatile than First Capital. It trades about -0.04 of its total potential returns per unit of risk. First Capital is currently generating about 0.04 per unit of volatility. If you would invest 2,287 in First Capital on August 30, 2024 and sell it today you would earn a total of 820.00 from holding First Capital or generate 35.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.35% |
| Values | Daily Returns |
First Republic Bank vs. First Capital
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Capital |
First Republic and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and First Capital
The main advantage of trading using opposite First Republic and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, First Capital 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 Capital will offset losses from the drop in First Capital's long position.| First Republic vs. Meiwu Technology Co | First Republic vs. AMCON Distributing | First Republic vs. Freedom Internet Group | First Republic vs. NETGEAR |
| First Capital vs. Home Federal Bancorp | First Capital vs. First Financial Northwest | First Capital vs. First Northwest Bancorp | First Capital vs. Community West Bancshares |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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