Correlation Between Republic Bancorp and IF Bancorp

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

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

Diversification Opportunities for Republic Bancorp and IF Bancorp

-0.43

Correlation Coefficient

Republic Bancorp  IF Bancorp

Very good diversification

The 3 months correlation between Republic and IROQ is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and IF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IF Bancorp and Republic 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 Republic Bancorp are associated (or correlated) with IF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IF Bancorp has no effect on the direction of Republic Bancorp i.e., Republic Bancorp and IF Bancorp go up and down completely randomly.

Pair Corralation between Republic Bancorp and IF Bancorp

Assuming the 90 days horizon Republic Bancorp is expected to under-perform the IF Bancorp. In addition to that, Republic Bancorp is 1.35 times more volatile than IF Bancorp. It trades about -0.07 of its total potential returns per unit of risk. IF Bancorp is currently generating about -0.03 per unit of volatility. If you would invest  2,419  in IF Bancorp on December 10, 2024 and sell it today you would lose (19.00) from holding IF Bancorp or give up 0.79% of portfolio value over 90 days.

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

Republic Bancorp  vs.  IF Bancorp

Republic Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Republic Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

IF Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IF Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IF Bancorp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Republic Bancorp and IF Bancorp

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

The idea behind Republic Bancorp and IF 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 Anywhere module to track or share privately all of your investments from the convenience of any device.