Correlation Between First Republic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both First Republic and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on First Republic and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Dow Jones.
Diversification Opportunities for First Republic and Dow Jones
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Dow is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of First Republic i.e., First Republic and Dow Jones go up and down completely randomly.
Pair Corralation between First Republic and Dow Jones
If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
First Republic Bank vs. Dow Jones Industrial
Performance |
| Timeline |
First Republic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
First Republic Bank
Pair trading matchups for First Republic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with First Republic and Dow Jones
The main advantage of trading using opposite First Republic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| First Republic vs. Luxfer Holdings PLC | First Republic vs. Hudson Technologies | First Republic vs. Codexis | First Republic vs. Agnico Eagle Mines |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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