Correlation Between First Republic and Independent Bank
Can any of the company-specific risk be diversified away by investing in both First Republic and Independent Bank 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 Independent Bank 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 Independent Bank, you can compare the effects of market volatilities on First Republic and Independent Bank 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 Independent Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Independent Bank.
Diversification Opportunities for First Republic and Independent Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Independent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Independent Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank 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 Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of First Republic i.e., First Republic and Independent Bank go up and down completely randomly.
Pair Corralation between First Republic and Independent Bank
If you would invest 5,008 in Independent Bank on December 5, 2024 and sell it today you would earn a total of 1,498 from holding Independent Bank or generate 29.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
First Republic Bank vs. Independent Bank
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Independent Bank |
First Republic and Independent Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and Independent Bank
The main advantage of trading using opposite First Republic and Independent Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, Independent Bank 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 Independent Bank will offset losses from the drop in Independent Bank's long position.| First Republic vs. Teleflex Incorporated | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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