Correlation Between First Republic and Hope Bancorp
Can any of the company-specific risk be diversified away by investing in both First Republic and Hope 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 Hope 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 Hope Bancorp, you can compare the effects of market volatilities on First Republic and Hope 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 Hope Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Hope Bancorp.
Diversification Opportunities for First Republic and Hope Bancorp
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Hope is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Hope Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hope 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 Hope Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hope Bancorp has no effect on the direction of First Republic i.e., First Republic and Hope Bancorp go up and down completely randomly.
Pair Corralation between First Republic and Hope Bancorp
Assuming the 90 days horizon First Republic Bank is expected to under-perform the Hope Bancorp. In addition to that, First Republic is 9.84 times more volatile than Hope Bancorp. It trades about -0.03 of its total potential returns per unit of risk. Hope Bancorp is currently generating about 0.02 per unit of volatility. If you would invest 1,172 in Hope Bancorp on September 3, 2024 and sell it today you would earn a total of 190.00 from holding Hope Bancorp or generate 16.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 29.7% |
| Values | Daily Returns |
First Republic Bank vs. Hope Bancorp
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hope Bancorp |
First Republic and Hope Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and Hope Bancorp
The main advantage of trading using opposite First Republic and Hope Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, Hope 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 Hope Bancorp will offset losses from the drop in Hope Bancorp's long position.| First Republic vs. Stepstone Group | First Republic vs. Sabra Healthcare REIT | First Republic vs. HNI Corp | First Republic vs. Nike Inc |
| Hope Bancorp vs. OP Bancorp | Hope Bancorp vs. PCB Bancorp | Hope Bancorp vs. Financial Institutions | Hope Bancorp vs. LINKBANCORP |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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