Correlation Between RBB Bancorp and Hope Bancorp

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

By analyzing existing cross correlation between RBB Bancorp and Hope Bancorp, you can compare the effects of market volatilities on RBB Bancorp and Hope 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 RBB Bancorp with a short position of Hope Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBB Bancorp and Hope Bancorp.

Diversification Opportunities for RBB Bancorp and Hope Bancorp

0.94

Correlation Coefficient

RBB Bancorp  Hope Bancorp

Almost no diversification

The 3 months correlation between RBB and Hope is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding RBB Bancorp and Hope Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hope Bancorp and RBB Bancorp 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 RBB Bancorp are associated (or correlated) with Hope Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hope Bancorp has no effect on the direction of RBB Bancorp i.e., RBB Bancorp and Hope Bancorp go up and down completely randomly.

Pair Corralation between RBB Bancorp and Hope Bancorp

Considering the 90-day investment horizon RBB Bancorp is expected to under-perform the Hope Bancorp. In addition to that, RBB Bancorp is 1.0 times more volatile than Hope Bancorp. It trades about -0.24 of its total potential returns per unit of risk. Hope Bancorp is currently generating about -0.15 per unit of volatility. If you would invest  1,228  in Hope Bancorp on December 26, 2024 and sell it today you would lose (167.00) from holding Hope Bancorp or give up 13.6% of portfolio value over 90 days.

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

RBB Bancorp  vs.  Hope Bancorp

RBB Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBB Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hope Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hope Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with RBB Bancorp and Hope Bancorp

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

The idea behind RBB Bancorp and Hope 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.