Correlation Between First Republic and Midland States
Can any of the company-specific risk be diversified away by investing in both First Republic and Midland States 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 Midland States 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 Midland States Bancorp, you can compare the effects of market volatilities on First Republic and Midland States 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 Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Midland States.
Diversification Opportunities for First Republic and Midland States
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Midland is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Midland States Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midland States 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 Midland States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midland States Bancorp has no effect on the direction of First Republic i.e., First Republic and Midland States go up and down completely randomly.
Pair Corralation between First Republic and Midland States
If you would invest 2,208 in Midland States Bancorp on September 5, 2024 and sell it today you would earn a total of 450.00 from holding Midland States Bancorp or generate 20.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 1.56% |
Values | Daily Returns |
First Republic Bank vs. Midland States Bancorp
Performance |
Timeline |
First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Midland States Bancorp |
First Republic and Midland States Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Republic and Midland States
The main advantage of trading using opposite First Republic and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic position performs unexpectedly, Midland States 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 Midland States will offset losses from the drop in Midland States' long position.First Republic vs. TFI International | First Republic vs. Stagwell | First Republic vs. Yuexiu Transport Infrastructure | First Republic vs. Inflection Point Acquisition |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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