Correlation Between Todos Medical and First Republic

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

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

Diversification Opportunities for Todos Medical and First Republic

0.0

Correlation Coefficient

Todos Medical  First Republic

Pay attention - limited upside

The 3 months correlation between Todos and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Todos Medical and First Republic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Republic Bank and Todos Medical 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 Todos Medical are associated (or correlated) with First Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Republic Bank has no effect on the direction of Todos Medical i.e., Todos Medical and First Republic go up and down completely randomly.

Pair Corralation between Todos Medical and First Republic

Assuming the 90 days horizon Todos Medical is expected to generate 1.77 times more return on investment than First Republic. However, Todos Medical is 1.77 times more volatile than First Republic Bank. It trades about 0.04 of its potential returns per unit of risk. First Republic Bank is currently generating about -0.04 per unit of risk. If you would invest  0.40  in Todos Medical on October 8, 2024 and sell it today you would lose (0.40) from holding Todos Medical or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	21.78%
Values	Daily Returns

Todos Medical  vs.  First Republic Bank

Todos Medical

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Todos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Todos Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 quite persistent forward indicators, First Republic is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Todos Medical and First Republic

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

The idea behind Todos Medical and First Republic Bank 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.