Correlation Between First Republic and Tectonic Financial
Can any of the company-specific risk be diversified away by investing in both First Republic and Tectonic Financial 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 Tectonic Financial 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 Tectonic Financial PR, you can compare the effects of market volatilities on First Republic and Tectonic Financial 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 Tectonic Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Tectonic Financial.
Diversification Opportunities for First Republic and Tectonic Financial
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Tectonic is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Tectonic Financial PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic 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 Tectonic Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Financial has no effect on the direction of First Republic i.e., First Republic and Tectonic Financial go up and down completely randomly.
Pair Corralation between First Republic and Tectonic Financial
Assuming the 90 days horizon First Republic Bank is expected to under-perform the Tectonic Financial. In addition to that, First Republic is 24.44 times more volatile than Tectonic Financial PR. It trades about -0.04 of its total potential returns per unit of risk. Tectonic Financial PR is currently generating about 0.04 per unit of volatility. If you would invest 850.00 in Tectonic Financial PR on August 23, 2024 and sell it today you would earn a total of 188.00 from holding Tectonic Financial PR or generate 22.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.26% |
| Values | Daily Returns |
First Republic Bank vs. Tectonic Financial PR
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tectonic Financial |
First Republic and Tectonic Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and Tectonic Financial
The main advantage of trading using opposite First Republic and Tectonic Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, Tectonic Financial 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 Tectonic Financial will offset losses from the drop in Tectonic Financial's long position.| First Republic vs. Sun Country Airlines | First Republic vs. Olympic Steel | First Republic vs. East Africa Metals | First Republic vs. Yuexiu Transport Infrastructure |
| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Bridgewater Bancshares Depositary |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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