Correlation Between Republic Bancorp and Mid Penn

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

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

Diversification Opportunities for Republic Bancorp and Mid Penn

0.81

Correlation Coefficient

Republic Bancorp  Mid Penn

Very poor diversification

The 3 months correlation between Republic and Mid is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and Mid Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Penn 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 Mid Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Penn Bancorp has no effect on the direction of Republic Bancorp i.e., Republic Bancorp and Mid Penn go up and down completely randomly.

Pair Corralation between Republic Bancorp and Mid Penn

Assuming the 90 days horizon Republic Bancorp is expected to under-perform the Mid Penn. In addition to that, Republic Bancorp is 1.37 times more volatile than Mid Penn Bancorp. It trades about -0.09 of its total potential returns per unit of risk. Mid Penn Bancorp is currently generating about 0.04 per unit of volatility. If you would invest  2,958  in Mid Penn Bancorp on November 20, 2024 and sell it today you would earn a total of  23.00  from holding Mid Penn Bancorp or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Republic Bancorp  vs.  Mid Penn 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.

Mid Penn Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Penn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mid Penn is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Republic Bancorp and Mid Penn

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

The idea behind Republic Bancorp and Mid Penn 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.