Correlation Between Republic Bancorp and Waterstone Financial
Can any of the company-specific risk be diversified away by investing in both Republic Bancorp and Waterstone 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 Waterstone 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 Waterstone Financial, you can compare the effects of market volatilities on Republic Bancorp and Waterstone 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 Waterstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Republic Bancorp and Waterstone Financial.
Diversification Opportunities for Republic Bancorp and Waterstone Financial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Republic and Waterstone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone 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 Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of Republic Bancorp i.e., Republic Bancorp and Waterstone Financial go up and down completely randomly.
Pair Corralation between Republic Bancorp and Waterstone Financial
Assuming the 90 days horizon Republic Bancorp is expected to generate 1.09 times more return on investment than Waterstone Financial. However, Republic Bancorp is 1.09 times more volatile than Waterstone Financial. It trades about 0.1 of its potential returns per unit of risk. Waterstone Financial is currently generating about 0.06 per unit of risk. If you would invest 4,673 in Republic Bancorp on August 27, 2024 and sell it today you would earn a total of 3,089 from holding Republic Bancorp or generate 66.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Republic Bancorp vs. Waterstone Financial
Performance |
| Timeline |
| Republic Bancorp |
| Waterstone Financial |
Republic Bancorp and Waterstone Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Republic Bancorp and Waterstone Financial
The main advantage of trading using opposite Republic Bancorp and Waterstone Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Republic Bancorp position performs unexpectedly, Waterstone 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 Waterstone Financial will offset losses from the drop in Waterstone 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 |
| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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