Correlation Between Analog Devices and Eastman Kodak
Can any of the company-specific risk be diversified away by investing in both Analog Devices 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 Analog Devices and Eastman Kodak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Eastman Kodak Co, you can compare the effects of market volatilities on Analog Devices 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 Analog Devices with a short position of Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Eastman Kodak.
Diversification Opportunities for Analog Devices and Eastman Kodak
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Analog and Eastman is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak and Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and Eastman Kodak go up and down completely randomly.
Pair Corralation between Analog Devices and Eastman Kodak
Considering the 90-day investment horizon Analog Devices is expected to generate 1.14 times less return on investment than Eastman Kodak. But when comparing it to its historical volatility, Analog Devices is 2.26 times less risky than Eastman Kodak. It trades about 0.04 of its potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 507.00 in Eastman Kodak Co on August 27, 2024 and sell it today you would earn a total of 20.00 from holding Eastman Kodak Co or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Eastman Kodak Co
Performance |
| Timeline |
| Analog Devices |
| Eastman Kodak |
Analog Devices and Eastman Kodak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Eastman Kodak
The main advantage of trading using opposite Analog Devices and Eastman Kodak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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 Analog Devices 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.| Eastman Kodak vs. SMX Public Limited | Eastman Kodak vs. System1 | Eastman Kodak vs. Lichen China Limited | Eastman Kodak vs. Team Inc |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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