Correlation Between National Bank and Republic Bancorp
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and Republic Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Republic Bancorp, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of Republic Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Republic Bancorp.
Diversification Opportunities for National Bank and Republic Bancorp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Republic is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Republic Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic Bancorp and National Bank 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 National Bank Holdings 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 National Bank i.e., National Bank and Republic Bancorp go up and down completely randomly.
Pair Corralation between National Bank and Republic Bancorp
Given the investment horizon of 90 days National Bank Holdings is expected to under-perform the Republic Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, National Bank Holdings is 1.17 times less risky than Republic Bancorp. The stock trades about -0.15 of its potential returns per unit of risk. The Republic Bancorp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 7,640 in Republic Bancorp on November 30, 2024 and sell it today you would lose (857.00) from holding Republic Bancorp or give up 11.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
National Bank Holdings vs. Republic Bancorp
Performance |
Timeline |
National Bank Holdings |
Republic Bancorp |
National Bank and Republic Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Bank and Republic Bancorp
The main advantage of trading using opposite National Bank and Republic Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
Republic Bancorp vs. First Community | Republic Bancorp vs. Community West Bancshares | Republic Bancorp vs. First Financial Northwest | Republic Bancorp vs. First Northwest Bancorp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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