Correlation Between US Bancorp and First Republic
Can any of the company-specific risk be diversified away by investing in both US Bancorp 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 US Bancorp and First Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and First Republic Bank, you can compare the effects of market volatilities on US Bancorp 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 US Bancorp with a short position of First Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and First Republic.
Diversification Opportunities for US Bancorp and First Republic
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USB and First is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp 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 US 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 US Bancorp 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 US Bancorp i.e., US Bancorp and First Republic go up and down completely randomly.
Pair Corralation between US Bancorp and First Republic
Considering the 90-day investment horizon US Bancorp is expected to generate 0.14 times more return on investment than First Republic. However, US Bancorp is 7.39 times less risky than First Republic. It trades about 0.04 of its potential returns per unit of risk. First Republic Bank is currently generating about -0.11 per unit of risk. If you would invest 3,972 in US Bancorp on August 24, 2024 and sell it today you would earn a total of 1,167 from holding US Bancorp or generate 29.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.72% |
| Values | Daily Returns |
US Bancorp vs. First Republic Bank
Performance |
| Timeline |
| US Bancorp |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
US Bancorp and First Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and First Republic
The main advantage of trading using opposite US Bancorp and First Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp 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.| US Bancorp vs. PNC Financial Services | US Bancorp vs. KeyCorp | US Bancorp vs. Zions Bancorporation | US Bancorp vs. Fifth Third Bancorp |
| First Republic vs. Jacobs Solutions | First Republic vs. Chester Mining | First Republic vs. Papaya Growth Opportunity | First Republic vs. Harmony Gold Mining |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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