Correlation Between RCM Technologies and Republic Bancorp

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Can any of the company-specific risk be diversified away by investing in both RCM Technologies and Republic Bancorp 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 RCM Technologies and Republic Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCM Technologies and Republic Bancorp, you can compare the effects of market volatilities on RCM Technologies and Republic Bancorp 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 RCM Technologies with a short position of Republic Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM Technologies and Republic Bancorp.

Diversification Opportunities for RCM Technologies and Republic Bancorp

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between RCM and Republic is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding RCM Technologies and Republic Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic Bancorp and RCM Technologies 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 RCM Technologies are associated (or correlated) with Republic Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Republic Bancorp has no effect on the direction of RCM Technologies i.e., RCM Technologies and Republic Bancorp go up and down completely randomly.

Pair Corralation between RCM Technologies and Republic Bancorp

Given the investment horizon of 90 days RCM Technologies is expected to generate 1.46 times more return on investment than Republic Bancorp. However, RCM Technologies is 1.46 times more volatile than Republic Bancorp. It trades about 0.04 of its potential returns per unit of risk. Republic Bancorp is currently generating about -0.21 per unit of risk. If you would invest  2,152  in RCM Technologies on September 23, 2024 and sell it today you would earn a total of  27.00  from holding RCM Technologies or generate 1.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

RCM Technologies  vs.  Republic Bancorp

 Performance 
       Timeline  
RCM Technologies 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in RCM Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, RCM Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Republic Bancorp 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Republic Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Republic Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RCM Technologies and Republic Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with RCM Technologies and Republic Bancorp

The main advantage of trading using opposite RCM Technologies and Republic Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM Technologies position performs unexpectedly, Republic Bancorp 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 Republic Bancorp will offset losses from the drop in Republic Bancorp's long position.
The idea behind RCM Technologies and Republic Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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