Correlation Between First Republic and Kearny Financial

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

Diversification Opportunities for First Republic and Kearny Financial

-0.46

Correlation Coefficient

First Republic  Kearny Financial

Very good diversification

The 3 months correlation between First and Kearny is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Kearny Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kearny Financial Corp 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 Kearny Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kearny Financial Corp has no effect on the direction of First Republic i.e., First Republic and Kearny Financial go up and down completely randomly.

Pair Corralation between First Republic and Kearny Financial

If you would invest  653.00  in Kearny Financial Corp on September 3, 2024 and sell it today you would earn a total of  139.00  from holding Kearny Financial Corp or generate 21.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

First Republic Bank  vs.  Kearny Financial Corp

First Republic Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Republic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, First Republic is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kearny Financial Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kearny Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Kearny Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Republic and Kearny Financial

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

The idea behind First Republic Bank and Kearny Financial Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.