Correlation Between Eastman Kodak and Seadrill
Can any of the company-specific risk be diversified away by investing in both Eastman Kodak and Seadrill 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 Seadrill 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 Seadrill Limited, you can compare the effects of market volatilities on Eastman Kodak and Seadrill 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 Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Kodak and Seadrill.
Diversification Opportunities for Eastman Kodak and Seadrill
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastman and Seadrill is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Kodak Co and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited 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 Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Eastman Kodak i.e., Eastman Kodak and Seadrill go up and down completely randomly.
Pair Corralation between Eastman Kodak and Seadrill
Given the investment horizon of 90 days Eastman Kodak Co is expected to generate 2.72 times more return on investment than Seadrill. However, Eastman Kodak is 2.72 times more volatile than Seadrill Limited. It trades about 0.2 of its potential returns per unit of risk. Seadrill Limited is currently generating about 0.1 per unit of risk. If you would invest 505.00 in Eastman Kodak Co on August 29, 2024 and sell it today you would earn a total of 157.00 from holding Eastman Kodak Co or generate 31.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Kodak Co vs. Seadrill Limited
Performance |
| Timeline |
| Eastman Kodak |
| Seadrill Limited |
Eastman Kodak and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Kodak and Seadrill
The main advantage of trading using opposite Eastman Kodak and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Kodak position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.| Eastman Kodak vs. SMX Public Limited | Eastman Kodak vs. System1 | Eastman Kodak vs. Lichen China Limited | Eastman Kodak vs. Team Inc |
| Seadrill vs. Noble plc | Seadrill vs. Nabors Industries | Seadrill vs. Precision Drilling | Seadrill vs. Sable Offshore Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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