Correlation Between PepsiCo and Eastman Kodak
Can any of the company-specific risk be diversified away by investing in both PepsiCo 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 PepsiCo and Eastman Kodak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PepsiCo and Eastman Kodak Co, you can compare the effects of market volatilities on PepsiCo 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 PepsiCo with a short position of Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of PepsiCo and Eastman Kodak.
Diversification Opportunities for PepsiCo and Eastman Kodak
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PepsiCo and Eastman is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PepsiCo and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak and PepsiCo 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 PepsiCo 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 PepsiCo i.e., PepsiCo and Eastman Kodak go up and down completely randomly.
Pair Corralation between PepsiCo and Eastman Kodak
Considering the 90-day investment horizon PepsiCo is expected to under-perform the Eastman Kodak. But the stock apears to be less risky and, when comparing its historical volatility, PepsiCo is 4.21 times less risky than Eastman Kodak. The stock trades about -0.01 of its potential returns per unit of risk. The Eastman Kodak Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 528.00 in Eastman Kodak Co on September 2, 2024 and sell it today you would earn a total of 197.00 from holding Eastman Kodak Co or generate 37.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PepsiCo vs. Eastman Kodak Co
Performance |
| Timeline |
| PepsiCo |
| Eastman Kodak |
PepsiCo and Eastman Kodak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PepsiCo and Eastman Kodak
The main advantage of trading using opposite PepsiCo and Eastman Kodak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PepsiCo 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.| PepsiCo vs. Coca Cola Consolidated | PepsiCo vs. Monster Beverage Corp | PepsiCo vs. Celsius Holdings | PepsiCo vs. Keurig Dr Pepper |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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