Correlation Between Eastman Kodak and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Eastman Kodak and Eastman Chemical 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 Eastman Kodak and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Kodak Co and Eastman Chemical, you can compare the effects of market volatilities on Eastman Kodak and Eastman Chemical 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 Eastman Kodak with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Kodak and Eastman Chemical.
Diversification Opportunities for Eastman Kodak and Eastman Chemical
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastman and Eastman is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Kodak Co and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Eastman Kodak 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 Eastman Kodak Co are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Eastman Kodak i.e., Eastman Kodak and Eastman Chemical go up and down completely randomly.
Pair Corralation between Eastman Kodak and Eastman Chemical
Given the investment horizon of 90 days Eastman Kodak Co is expected to generate 2.54 times more return on investment than Eastman Chemical. However, Eastman Kodak is 2.54 times more volatile than Eastman Chemical. It trades about 0.05 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.04 per unit of risk. If you would invest 363.00 in Eastman Kodak Co on September 3, 2024 and sell it today you would earn a total of 362.00 from holding Eastman Kodak Co or generate 99.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Kodak Co vs. Eastman Chemical
Performance |
| Timeline |
| Eastman Kodak |
| Eastman Chemical |
Eastman Kodak and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Kodak and Eastman Chemical
The main advantage of trading using opposite Eastman Kodak and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Kodak position performs unexpectedly, Eastman Chemical 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 Chemical will offset losses from the drop in Eastman Chemical's long position.| Eastman Kodak vs. SMX Public Limited | Eastman Kodak vs. System1 | Eastman Kodak vs. Lichen China Limited | Eastman Kodak vs. Team Inc |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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