Correlation Between First Republic and BankFinancial
Can any of the company-specific risk be diversified away by investing in both First Republic and BankFinancial 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 BankFinancial 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 BankFinancial, you can compare the effects of market volatilities on First Republic and BankFinancial 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 BankFinancial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and BankFinancial.
Diversification Opportunities for First Republic and BankFinancial
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and BankFinancial is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and BankFinancial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFinancial 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 BankFinancial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFinancial has no effect on the direction of First Republic i.e., First Republic and BankFinancial go up and down completely randomly.
Pair Corralation between First Republic and BankFinancial
Assuming the 90 days horizon First Republic Bank is expected to generate 22.62 times more return on investment than BankFinancial. However, First Republic is 22.62 times more volatile than BankFinancial. It trades about 0.14 of its potential returns per unit of risk. BankFinancial is currently generating about 0.11 per unit of risk. If you would invest 1.00 in First Republic Bank on September 1, 2024 and sell it today you would lose (0.10) from holding First Republic Bank or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 6.72% |
| Values | Daily Returns |
First Republic Bank vs. BankFinancial
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BankFinancial |
First Republic and BankFinancial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and BankFinancial
The main advantage of trading using opposite First Republic and BankFinancial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, BankFinancial 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 BankFinancial will offset losses from the drop in BankFinancial's long position.| First Republic vs. MACOM Technology Solutions | First Republic vs. Elmos Semiconductor SE | First Republic vs. NioCorp Developments Ltd | First Republic vs. Eldorado Gold Corp |
| BankFinancial vs. First Business Financial | BankFinancial vs. Old Point Financial | BankFinancial vs. Parke Bancorp | BankFinancial 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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