Correlation Between SouthState and Republic Bancorp

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

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

Diversification Opportunities for SouthState and Republic Bancorp

0.93

Correlation Coefficient

SouthState  Republic Bancorp

Almost no diversification

The 3 months correlation between SouthState and Republic is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SouthState and Republic Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic Bancorp and SouthState 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 SouthState 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 SouthState i.e., SouthState and Republic Bancorp go up and down completely randomly.

Pair Corralation between SouthState and Republic Bancorp

Considering the 90-day investment horizon SouthState is expected to under-perform the Republic Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, SouthState is 1.1 times less risky than Republic Bancorp. The stock trades about -0.34 of its potential returns per unit of risk. The Republic Bancorp is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest  7,411  in Republic Bancorp on October 10, 2024 and sell it today you would lose (746.00) from holding Republic Bancorp or give up 10.07% of portfolio value over 90 days.

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

SouthState  vs.  Republic Bancorp

SouthState

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SouthState are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SouthState is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Republic Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Republic Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SouthState and Republic Bancorp

The main advantage of trading using opposite SouthState and Republic Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SouthState 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.

The idea behind SouthState and Republic 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.