Correlation Between Republic Bancorp and BKV

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

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

Diversification Opportunities for Republic Bancorp and BKV

0.7

Correlation Coefficient

Republic Bancorp  BKV

Poor diversification

The 3 months correlation between Republic and BKV is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation and Republic Bancorp 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 Republic Bancorp are associated (or correlated) with BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of Republic Bancorp i.e., Republic Bancorp and BKV go up and down completely randomly.

Pair Corralation between Republic Bancorp and BKV

Assuming the 90 days horizon Republic Bancorp is expected to generate 1.42 times less return on investment than BKV. In addition to that, Republic Bancorp is 1.42 times more volatile than BKV Corporation. It trades about 0.09 of its total potential returns per unit of risk. BKV Corporation is currently generating about 0.17 per unit of volatility. If you would invest  1,800  in BKV Corporation on September 24, 2024 and sell it today you would earn a total of  369.00  from holding BKV Corporation or generate 20.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

Republic Bancorp  vs.  BKV Corp.

Republic Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Republic Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

BKV Corporation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Republic Bancorp and BKV

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

The idea behind Republic Bancorp and BKV Corporation 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.

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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 Positions Ratings module to 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.