Correlation Between First Republic and ECB Bancorp
Can any of the company-specific risk be diversified away by investing in both First Republic and ECB 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 ECB 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 ECB Bancorp, you can compare the effects of market volatilities on First Republic and ECB 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 ECB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and ECB Bancorp.
Diversification Opportunities for First Republic and ECB Bancorp
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and ECB is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and ECB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECB 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 ECB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECB Bancorp has no effect on the direction of First Republic i.e., First Republic and ECB Bancorp go up and down completely randomly.
Pair Corralation between First Republic and ECB Bancorp
If you would invest 0.02 in First Republic Bank on August 30, 2024 and sell it today you would earn a total of 0.00 from holding First Republic Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
First Republic Bank vs. ECB Bancorp
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ECB Bancorp |
First Republic and ECB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and ECB Bancorp
The main advantage of trading using opposite First Republic and ECB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, ECB 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 ECB Bancorp will offset losses from the drop in ECB Bancorp's long position.| First Republic vs. Cincinnati Financial | First Republic vs. Fernhill Beverage | First Republic vs. National Beverage Corp | First Republic vs. QBE Insurance Group |
| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore Bancorp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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