Correlation Between First Republic and South Plains
Can any of the company-specific risk be diversified away by investing in both First Republic and South Plains 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 South Plains 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 South Plains Financial, you can compare the effects of market volatilities on First Republic and South Plains 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 South Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and South Plains.
Diversification Opportunities for First Republic and South Plains
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and South is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and South Plains Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Plains Financial 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 South Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Plains Financial has no effect on the direction of First Republic i.e., First Republic and South Plains go up and down completely randomly.
Pair Corralation between First Republic and South Plains
If you would invest 3,410 in South Plains Financial on November 3, 2024 and sell it today you would earn a total of 183.00 from holding South Plains Financial or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
First Republic Bank vs. South Plains Financial
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| South Plains Financial |
First Republic and South Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and South Plains
The main advantage of trading using opposite First Republic and South Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, South Plains 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 South Plains will offset losses from the drop in South Plains' long position.| First Republic vs. Brandywine Realty Trust | First Republic vs. Willamette Valley Vineyards | First Republic vs. Naked Wines plc | First Republic vs. Diamond Estates Wines |
| South Plains vs. Sound Financial Bancorp | South Plains vs. Finward Bancorp | South Plains vs. Franklin Financial Services | South Plains 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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