Correlation Between First Republic and Sterling Bancorp
Can any of the company-specific risk be diversified away by investing in both First Republic and Sterling Bancorp 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 Sterling Bancorp 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 Sterling Bancorp, you can compare the effects of market volatilities on First Republic and Sterling Bancorp 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 Sterling Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Sterling Bancorp.
Diversification Opportunities for First Republic and Sterling Bancorp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Sterling is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Sterling Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Bancorp 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 Sterling Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Bancorp has no effect on the direction of First Republic i.e., First Republic and Sterling Bancorp go up and down completely randomly.
Pair Corralation between First Republic and Sterling Bancorp
Assuming the 90 days horizon First Republic Bank is expected to under-perform the Sterling Bancorp. In addition to that, First Republic is 12.16 times more volatile than Sterling Bancorp. It trades about -0.04 of its total potential returns per unit of risk. Sterling Bancorp is currently generating about -0.01 per unit of volatility. If you would invest 630.00 in Sterling Bancorp on August 30, 2024 and sell it today you would lose (144.00) from holding Sterling Bancorp or give up 22.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.85% |
| Values | Daily Returns |
First Republic Bank vs. Sterling Bancorp
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sterling Bancorp |
First Republic and Sterling Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and Sterling Bancorp
The main advantage of trading using opposite First Republic and Sterling Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, Sterling Bancorp 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 Sterling Bancorp will offset losses from the drop in Sterling Bancorp's long position.| First Republic vs. AMCON Distributing | First Republic vs. Radcom | First Republic vs. Marfrig Global Foods | First Republic vs. Kandi Technologies Group |
| Sterling Bancorp vs. Home Federal Bancorp | Sterling Bancorp vs. Lake Shore Bancorp | Sterling Bancorp vs. Magyar Bancorp | Sterling Bancorp vs. Franklin Financial Services |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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