Correlation Between Westinghouse Air and Eastman Kodak
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air 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 Westinghouse Air and Eastman Kodak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westinghouse Air Brake and Eastman Kodak Co, you can compare the effects of market volatilities on Westinghouse Air 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 Westinghouse Air with a short position of Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Eastman Kodak.
Diversification Opportunities for Westinghouse Air and Eastman Kodak
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westinghouse and Eastman is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak and Westinghouse Air 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 Westinghouse Air Brake 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 Westinghouse Air i.e., Westinghouse Air and Eastman Kodak go up and down completely randomly.
Pair Corralation between Westinghouse Air and Eastman Kodak
Considering the 90-day investment horizon Westinghouse Air is expected to generate 1.06 times less return on investment than Eastman Kodak. But when comparing it to its historical volatility, Westinghouse Air Brake is 2.74 times less risky than Eastman Kodak. It trades about 0.26 of its potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 688.00 in Eastman Kodak Co on October 20, 2024 and sell it today you would earn a total of 40.00 from holding Eastman Kodak Co or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Eastman Kodak Co
Performance |
| Timeline |
| Westinghouse Air Brake |
| Eastman Kodak |
Westinghouse Air and Eastman Kodak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Eastman Kodak
The main advantage of trading using opposite Westinghouse Air and Eastman Kodak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air 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.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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