Correlation Between Team and Eastman Kodak
Can any of the company-specific risk be diversified away by investing in both Team 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 Team and Eastman Kodak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Team Inc and Eastman Kodak Co, you can compare the effects of market volatilities on Team 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 Team with a short position of Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Team and Eastman Kodak.
Diversification Opportunities for Team and Eastman Kodak
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Team and Eastman is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak and Team 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 Team Inc 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 Team i.e., Team and Eastman Kodak go up and down completely randomly.
Pair Corralation between Team and Eastman Kodak
Given the investment horizon of 90 days Team is expected to generate 1.42 times less return on investment than Eastman Kodak. In addition to that, Team is 1.65 times more volatile than Eastman Kodak Co. It trades about 0.03 of its total potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.06 per unit of volatility. If you would invest 505.00 in Eastman Kodak Co on August 27, 2024 and sell it today you would earn a total of 22.00 from holding Eastman Kodak Co or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Team Inc vs. Eastman Kodak Co
Performance |
| Timeline |
| Team Inc |
| Eastman Kodak |
Team and Eastman Kodak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Team and Eastman Kodak
The main advantage of trading using opposite Team and Eastman Kodak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Team 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 Team Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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