Correlation Between First Republic and BFC Capital
Can any of the company-specific risk be diversified away by investing in both First Republic and BFC 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 BFC 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 BFC Capital Trust, you can compare the effects of market volatilities on First Republic and BFC 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 BFC Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and BFC Capital.
Diversification Opportunities for First Republic and BFC Capital
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and BFC is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and BFC Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BFC Capital Trust 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 BFC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BFC Capital Trust has no effect on the direction of First Republic i.e., First Republic and BFC Capital go up and down completely randomly.
Pair Corralation between First Republic and BFC Capital
Assuming the 90 days horizon First Republic Bank is expected to under-perform the BFC Capital. In addition to that, First Republic is 8.18 times more volatile than BFC Capital Trust. It trades about -0.04 of its total potential returns per unit of risk. BFC Capital Trust is currently generating about 0.01 per unit of volatility. If you would invest 2,900 in BFC Capital Trust on August 31, 2024 and sell it today you would lose (330.00) from holding BFC Capital Trust or give up 11.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 29.35% |
| Values | Daily Returns |
First Republic Bank vs. BFC Capital Trust
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BFC Capital Trust |
First Republic and BFC Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and BFC Capital
The main advantage of trading using opposite First Republic and BFC Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, BFC 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 BFC Capital will offset losses from the drop in BFC Capital's long position.| First Republic vs. Lindblad Expeditions Holdings | First Republic vs. Apogee Enterprises | First Republic vs. Eastman Kodak Co | First Republic vs. Academy Sports Outdoors |
| BFC Capital vs. Popular Capital Trust | BFC Capital vs. CHS Inc CN | BFC Capital vs. Wintrust Financial Corp | BFC Capital vs. Auburn National 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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