Correlation Between First Republic and ESSA Bancorp
Can any of the company-specific risk be diversified away by investing in both First Republic and ESSA 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 ESSA 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 ESSA Bancorp, you can compare the effects of market volatilities on First Republic and ESSA 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 ESSA Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and ESSA Bancorp.
Diversification Opportunities for First Republic and ESSA Bancorp
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and ESSA is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and ESSA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA 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 ESSA Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Bancorp has no effect on the direction of First Republic i.e., First Republic and ESSA Bancorp go up and down completely randomly.
Pair Corralation between First Republic and ESSA Bancorp
If you would invest 1,888 in ESSA Bancorp on August 26, 2024 and sell it today you would earn a total of 142.00 from holding ESSA Bancorp or generate 7.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.27% |
| Values | Daily Returns |
First Republic Bank vs. ESSA Bancorp
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ESSA Bancorp |
First Republic and ESSA Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and ESSA Bancorp
The main advantage of trading using opposite First Republic and ESSA Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, ESSA 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 ESSA Bancorp will offset losses from the drop in ESSA Bancorp's long position.| First Republic vs. Pintec Technology Holdings | First Republic vs. Sun Life Financial | First Republic vs. Commonwealth Bank of | First Republic vs. Cincinnati Financial |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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