Correlation Between NYSE Composite and First Republic
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and First Republic 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 NYSE Composite and First Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and First Republic Bank, you can compare the effects of market volatilities on NYSE Composite and First Republic 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 NYSE Composite with a short position of First Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and First Republic.
Diversification Opportunities for NYSE Composite and First Republic
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and First is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and First Republic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Republic Bank and NYSE Composite 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 NYSE Composite are associated (or correlated) with First Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Republic Bank has no effect on the direction of NYSE Composite i.e., NYSE Composite and First Republic go up and down completely randomly.
Pair Corralation between NYSE Composite and First Republic
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.03 times more return on investment than First Republic. However, NYSE Composite is 38.07 times less risky than First Republic. It trades about 0.08 of its potential returns per unit of risk. First Republic Bank is currently generating about -0.04 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.59% |
| Values | Daily Returns |
NYSE Composite vs. First Republic Bank
Performance |
| Timeline |
NYSE Composite and First Republic Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
First Republic Bank
Pair trading matchups for First Republic
Pair Trading with NYSE Composite and First Republic
The main advantage of trading using opposite NYSE Composite and First Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, First Republic 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 First Republic will offset losses from the drop in First Republic's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| First Republic vs. Vita Coco | First Republic vs. Diageo PLC ADR | First Republic vs. Molson Coors Brewing | First Republic vs. Ambev SA ADR |
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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