Correlation Between CNB Financial and Republic Bancorp

Can any of the company-specific risk be diversified away by investing in both CNB 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 CNB 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 CNB Financial and Republic Bancorp, you can compare the effects of market volatilities on CNB 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 CNB Financial with a short position of Republic Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNB Financial and Republic Bancorp.

Diversification Opportunities for CNB Financial and Republic Bancorp

0.94

Correlation Coefficient

CNB Financial  Republic Bancorp

Almost no diversification

The 3 months correlation between CNB and Republic is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding CNB Financial and Republic Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic Bancorp and CNB 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 CNB 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 CNB Financial i.e., CNB Financial and Republic Bancorp go up and down completely randomly.

Pair Corralation between CNB Financial and Republic Bancorp

Given the investment horizon of 90 days CNB Financial is expected to generate 4.03 times less return on investment than Republic Bancorp. But when comparing it to its historical volatility, CNB Financial is 1.08 times less risky than Republic Bancorp. It trades about 0.01 of its potential returns per unit of risk. Republic Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,664  in Republic Bancorp on October 25, 2024 and sell it today you would earn a total of  127.00  from holding Republic Bancorp or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

CNB Financial  vs.  Republic Bancorp

CNB Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CNB Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Republic Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Republic Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CNB Financial and Republic Bancorp

The main advantage of trading using opposite CNB Financial and Republic Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNB 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.

The idea behind CNB Financial 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..