Correlation Between First Republic and IPC MEXICO

Can any of the company-specific risk be diversified away by investing in both First Republic and IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO, you can compare the effects of market volatilities on First Republic and IPC MEXICO 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 IPC MEXICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and IPC MEXICO.

Diversification Opportunities for First Republic and IPC MEXICO

0.0

Correlation Coefficient

First Republic  IPC MEXICO

Pay attention - limited upside

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

Pair Corralation between First Republic and IPC MEXICO

If you would invest  5,082,806  in IPC MEXICO on December 1, 2024 and sell it today you would earn a total of  154,896  from holding IPC MEXICO or generate 3.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

First Republic Bank  vs.  IPC MEXICO

Pair Trading with First Republic and IPC MEXICO

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

The idea behind First Republic Bank and IPC MEXICO 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.