Correlation Between First Republic and New York

Can any of the company-specific risk be diversified away by investing in both First Republic and New York 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 New York 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 New York Community, you can compare the effects of market volatilities on First Republic and New York 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 New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and New York.

Diversification Opportunities for First Republic and New York

-0.15

Correlation Coefficient

First Republic  New York

Good diversification

The 3 months correlation between First and New is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and New York Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Community 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Community has no effect on the direction of First Republic i.e., First Republic and New York go up and down completely randomly.

Pair Corralation between First Republic and New York

If you would invest  1,050  in New York Community on September 3, 2024 and sell it today you would earn a total of  31.00  from holding New York Community or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.85%
Values	Daily Returns

First Republic Bank  vs.  New York Community

First Republic Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

New York Community

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days New York Community has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak fundamental indicators, New York may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with First Republic and New York

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

The idea behind First Republic Bank and New York Community 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.