Correlation Between First Republic and Eastman Kodak

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

Diversification Opportunities for First Republic and Eastman Kodak

-0.15

Correlation Coefficient

First Republic  Eastman Kodak

Good diversification

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

Pair Corralation between First Republic and Eastman Kodak

Given the investment horizon of 90 days First Republic Bank is expected to under-perform the Eastman Kodak. In addition to that, First Republic is 4.0 times more volatile than Eastman Kodak Co. It trades about -0.12 of its total potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.06 per unit of volatility. If you would invest  313.00  in Eastman Kodak Co on September 12, 2024 and sell it today you would earn a total of  353.00  from holding Eastman Kodak Co or generate 112.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.09%
Values	Daily Returns

First Republic Bank  vs.  Eastman Kodak Co

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.

Eastman Kodak

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Kodak Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Eastman Kodak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Republic and Eastman Kodak

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

The idea behind First Republic Bank and Eastman Kodak Co 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.