Correlation Between FIRST REPUBLIC and US Bancorp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both FIRST REPUBLIC and US 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 FIRST REPUBLIC and US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST REPUBLIC BANK and US Bancorp, you can compare the effects of market volatilities on FIRST REPUBLIC and US 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 FIRST REPUBLIC with a short position of US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST REPUBLIC and US Bancorp.

Diversification Opportunities for FIRST REPUBLIC and US Bancorp

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between FIRST and US Bancorp is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding FIRST REPUBLIC BANK and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp and FIRST REPUBLIC 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 FIRST REPUBLIC BANK are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of FIRST REPUBLIC i.e., FIRST REPUBLIC and US Bancorp go up and down completely randomly.

Pair Corralation between FIRST REPUBLIC and US Bancorp

Considering the 90-day investment horizon FIRST REPUBLIC BANK is expected to generate 1.0 times more return on investment than US Bancorp. However, FIRST REPUBLIC BANK is 1.0 times less risky than US Bancorp. It trades about 0.05 of its potential returns per unit of risk. US Bancorp is currently generating about 0.05 per unit of risk. If you would invest  11,157  in FIRST REPUBLIC BANK on May 12, 2022 and sell it today you would earn a total of  5,198  from holding FIRST REPUBLIC BANK or generate 46.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

FIRST REPUBLIC BANK  vs.  US Bancorp

 Performance (%) 
       Timeline  
FIRST REPUBLIC BANK 
FIRST Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in FIRST REPUBLIC BANK are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FIRST REPUBLIC sustained solid returns over the last few months and may actually be approaching a breakup point.

FIRST Price Channel

US Bancorp 
US Bancorp Performance
0 of 100
Over the last 90 days US Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, US Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

US Bancorp Price Channel

FIRST REPUBLIC and US Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FIRST REPUBLIC and US Bancorp

The main advantage of trading using opposite FIRST REPUBLIC and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST REPUBLIC position performs unexpectedly, US 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 US Bancorp will offset losses from the drop in US Bancorp's long position.
The idea behind FIRST REPUBLIC BANK and US 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

Other Complementary Tools

Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
ETF Directory
Find actively traded Exchange Traded Funds (ETF) from around the world
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go