Correlation Between First Republic and OceanFirst Financial
Can any of the company-specific risk be diversified away by investing in both First Republic and OceanFirst Financial 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 OceanFirst Financial 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 OceanFirst Financial Corp, you can compare the effects of market volatilities on First Republic and OceanFirst Financial 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 OceanFirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and OceanFirst Financial.
Diversification Opportunities for First Republic and OceanFirst Financial
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and OceanFirst is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and OceanFirst Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanFirst Financial Corp 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 OceanFirst Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanFirst Financial Corp has no effect on the direction of First Republic i.e., First Republic and OceanFirst Financial go up and down completely randomly.
Pair Corralation between First Republic and OceanFirst Financial
Assuming the 90 days horizon First Republic Bank is expected to under-perform the OceanFirst Financial. In addition to that, First Republic is 9.14 times more volatile than OceanFirst Financial Corp. It trades about -0.08 of its total potential returns per unit of risk. OceanFirst Financial Corp is currently generating about 0.01 per unit of volatility. If you would invest 1,949 in OceanFirst Financial Corp on September 13, 2024 and sell it today you would earn a total of 49.00 from holding OceanFirst Financial Corp or generate 2.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 28.95% |
Values | Daily Returns |
First Republic Bank vs. OceanFirst Financial Corp
Performance |
Timeline |
First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
OceanFirst Financial Corp |
First Republic and OceanFirst Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Republic and OceanFirst Financial
The main advantage of trading using opposite First Republic and OceanFirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, OceanFirst Financial 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 OceanFirst Financial will offset losses from the drop in OceanFirst Financial's long position.First Republic vs. LENSAR Inc | First Republic vs. Rivian Automotive | First Republic vs. Thor Industries | First Republic vs. The Joint Corp |
OceanFirst Financial vs. Flushing Financial | OceanFirst Financial vs. Dime Community Bancshares | OceanFirst Financial vs. Peapack Gladstone Financial | OceanFirst Financial vs. Heritage Financial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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