Correlation Between Republic Bancorp and First Community
Can any of the company-specific risk be diversified away by investing in both Republic Bancorp and First Community 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 Republic Bancorp and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Republic Bancorp and First Community, you can compare the effects of market volatilities on Republic Bancorp and First Community 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 Republic Bancorp with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Republic Bancorp and First Community.
Diversification Opportunities for Republic Bancorp and First Community
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Republic and First is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community and Republic Bancorp 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 Republic Bancorp are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of Republic Bancorp i.e., Republic Bancorp and First Community go up and down completely randomly.
Pair Corralation between Republic Bancorp and First Community
Assuming the 90 days horizon Republic Bancorp is expected to under-perform the First Community. But the stock apears to be less risky and, when comparing its historical volatility, Republic Bancorp is 1.3 times less risky than First Community. The stock trades about -0.11 of its potential returns per unit of risk. The First Community is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,361 in First Community on November 5, 2024 and sell it today you would earn a total of 232.00 from holding First Community or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Republic Bancorp vs. First Community
Performance |
| Timeline |
| Republic Bancorp |
| First Community |
Republic Bancorp and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Republic Bancorp and First Community
The main advantage of trading using opposite Republic Bancorp and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Republic Bancorp position performs unexpectedly, First Community 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 Community will offset losses from the drop in First Community's long position.| Republic Bancorp vs. First Community | Republic Bancorp vs. Community West Bancshares | Republic Bancorp vs. First Financial Northwest | Republic Bancorp vs. First Northwest Bancorp |
| First Community vs. Community West Bancshares | First Community vs. First Financial Northwest | First Community vs. First Northwest Bancorp | First Community vs. Home Federal 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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