Correlation Between Waterstone Financial and Republic Bancorp
Can any of the company-specific risk be diversified away by investing in both Waterstone Financial 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 Waterstone Financial and Republic Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waterstone Financial and Republic Bancorp, you can compare the effects of market volatilities on Waterstone Financial 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 Waterstone Financial with a short position of Republic Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterstone Financial and Republic Bancorp.
Diversification Opportunities for Waterstone Financial and Republic Bancorp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waterstone and Republic is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Waterstone Financial and Republic Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic Bancorp and Waterstone Financial 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 Waterstone Financial 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 Waterstone Financial i.e., Waterstone Financial and Republic Bancorp go up and down completely randomly.
Pair Corralation between Waterstone Financial and Republic Bancorp
Given the investment horizon of 90 days Waterstone Financial is expected to generate 1.85 times less return on investment than Republic Bancorp. But when comparing it to its historical volatility, Waterstone Financial is 1.09 times less risky than Republic Bancorp. It trades about 0.06 of its potential returns per unit of risk. Republic Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,559 in Republic Bancorp on August 26, 2024 and sell it today you would earn a total of 3,203 from holding Republic Bancorp or generate 70.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waterstone Financial vs. Republic Bancorp
Performance |
| Timeline |
| Waterstone Financial |
| Republic Bancorp |
Waterstone Financial and Republic Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterstone Financial and Republic Bancorp
The main advantage of trading using opposite Waterstone Financial and Republic Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterstone Financial 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.| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial Corp |
| Republic Bancorp vs. First Community | Republic Bancorp vs. Community West Bancshares | Republic Bancorp vs. First Financial Northwest | Republic Bancorp vs. First Northwest 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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