Correlation Between Select Sector and First Republic
Can any of the company-specific risk be diversified away by investing in both Select Sector 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 Select Sector and First Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Select Sector and First Republic Bank, you can compare the effects of market volatilities on Select Sector 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 Select Sector with a short position of First Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Sector and First Republic.
Diversification Opportunities for Select Sector and First Republic
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Select and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The Select Sector 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 Select Sector 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 The Select Sector 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 Select Sector i.e., Select Sector and First Republic go up and down completely randomly.
Pair Corralation between Select Sector and First Republic
If you would invest 178,300 in The Select Sector on August 31, 2024 and sell it today you would earn a total of 18,200 from holding The Select Sector or generate 10.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Select Sector vs. First Republic Bank
Performance |
| Timeline |
| Select Sector |
| First Republic Bank |
Select Sector and First Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Sector and First Republic
The main advantage of trading using opposite Select Sector and First Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Sector 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.| Select Sector vs. Promotora y Operadora | Select Sector vs. UnitedHealth Group Incorporated | Select Sector vs. Qulitas Controladora SAB | Select Sector vs. Hoteles City Express |
| First Republic vs. Grupo Financiero Banorte | First Republic vs. Grupo Financiero Inbursa | First Republic vs. Banco del Bajo |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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