Correlation Between Eastman Kodak and IRobot
Can any of the company-specific risk be diversified away by investing in both Eastman Kodak and IRobot 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 IRobot 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 iRobot, you can compare the effects of market volatilities on Eastman Kodak and IRobot 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 IRobot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Kodak and IRobot.
Diversification Opportunities for Eastman Kodak and IRobot
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eastman and IRobot is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Kodak Co and iRobot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRobot 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 IRobot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iRobot has no effect on the direction of Eastman Kodak i.e., Eastman Kodak and IRobot go up and down completely randomly.
Pair Corralation between Eastman Kodak and IRobot
Given the investment horizon of 90 days Eastman Kodak Co is expected to generate 0.43 times more return on investment than IRobot. However, Eastman Kodak Co is 2.31 times less risky than IRobot. It trades about 0.02 of its potential returns per unit of risk. iRobot is currently generating about -0.1 per unit of risk. If you would invest 461.00 in Eastman Kodak Co on January 23, 2024 and sell it today you would earn a total of 1.00 from holding Eastman Kodak Co or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Kodak Co vs. iRobot
Performance |
| Timeline |
| Eastman Kodak |
| iRobot |
Eastman Kodak and IRobot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Kodak and IRobot
The main advantage of trading using opposite Eastman Kodak and IRobot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Kodak position performs unexpectedly, IRobot 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 IRobot will offset losses from the drop in IRobot's long position.| Eastman Kodak vs. LG Display Co | Eastman Kodak vs. Sony Corp | Eastman Kodak vs. Sonos Inc | Eastman Kodak vs. Vizio Holding Corp |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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