Correlation Between Republic Bancorp and RAYTHEON

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

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

Diversification Opportunities for Republic Bancorp and RAYTHEON

-0.5

Correlation Coefficient

Republic Bancorp  RAYTHEON

Very good diversification

The 3 months correlation between Republic and RAYTHEON is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and RAYTHEON TECHNOLOGIES PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAYTHEON TECHNOLOGIES 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 RAYTHEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAYTHEON TECHNOLOGIES has no effect on the direction of Republic Bancorp i.e., Republic Bancorp and RAYTHEON go up and down completely randomly.

Pair Corralation between Republic Bancorp and RAYTHEON

Assuming the 90 days horizon Republic Bancorp is expected to under-perform the RAYTHEON. But the stock apears to be less risky and, when comparing its historical volatility, Republic Bancorp is 1.38 times less risky than RAYTHEON. The stock trades about -0.21 of its potential returns per unit of risk. The RAYTHEON TECHNOLOGIES PORATION is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,355  in RAYTHEON TECHNOLOGIES PORATION on September 24, 2024 and sell it today you would earn a total of  213.00  from holding RAYTHEON TECHNOLOGIES PORATION or generate 3.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Republic Bancorp  vs.  RAYTHEON TECHNOLOGIES PORATION

Republic Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Republic Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

RAYTHEON TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Republic Bancorp and RAYTHEON

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

The idea behind Republic Bancorp and RAYTHEON TECHNOLOGIES PORATION 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.