Correlation Between Republic Bancorp and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both Republic Bancorp and Heritage 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 Republic Bancorp and Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Republic Bancorp and Heritage Financial, you can compare the effects of market volatilities on Republic Bancorp and Heritage 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 Republic Bancorp with a short position of Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Republic Bancorp and Heritage Financial.
Diversification Opportunities for Republic Bancorp and Heritage Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Republic and Heritage is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial 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 Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of Republic Bancorp i.e., Republic Bancorp and Heritage Financial go up and down completely randomly.
Pair Corralation between Republic Bancorp and Heritage Financial
Assuming the 90 days horizon Republic Bancorp is expected to under-perform the Heritage Financial. In addition to that, Republic Bancorp is 1.01 times more volatile than Heritage Financial. It trades about -0.06 of its total potential returns per unit of risk. Heritage Financial is currently generating about 0.0 per unit of volatility. If you would invest 2,432 in Heritage Financial on November 18, 2024 and sell it today you would lose (7.00) from holding Heritage Financial or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Republic Bancorp vs. Heritage Financial
Performance |
| Timeline |
| Republic Bancorp |
| Heritage Financial |
Republic Bancorp and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Republic Bancorp and Heritage Financial
The main advantage of trading using opposite Republic Bancorp and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Republic Bancorp position performs unexpectedly, Heritage 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 Heritage Financial will offset losses from the drop in Heritage Financial'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 |
| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Independent Bank | Heritage Financial vs. Great Southern 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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