Correlation Between First Republic and Internacional

Can any of the company-specific risk be diversified away by investing in both First Republic and Internacional 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 First Republic and Internacional into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Republic Bank and Internacional de Cermica, you can compare the effects of market volatilities on First Republic and Internacional 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 First Republic with a short position of Internacional. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Internacional.

Diversification Opportunities for First Republic and Internacional

0.0

Correlation Coefficient

First Republic  Internacional

Pay attention - limited upside

The 3 months correlation between First and Internacional is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Internacional de Cermica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internacional de Cermica and First Republic 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 First Republic Bank are associated (or correlated) with Internacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internacional de Cermica has no effect on the direction of First Republic i.e., First Republic and Internacional go up and down completely randomly.

Pair Corralation between First Republic and Internacional

If you would invest  9,600  in Internacional de Cermica on December 26, 2024 and sell it today you would earn a total of  0.00  from holding Internacional de Cermica or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Republic Bank  vs.  Internacional de Cermica

First Republic Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Republic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, First Republic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Internacional de Cermica

Risk-Adjusted Performance

Very Weak

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

Pair Trading with First Republic and Internacional

The main advantage of trading using opposite First Republic and Internacional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, Internacional 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 Internacional will offset losses from the drop in Internacional's long position.

The idea behind First Republic Bank and Internacional de Cermica 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.