Correlation Between IRobot and Eastman Kodak

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Can any of the company-specific risk be diversified away by investing in both IRobot 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 IRobot and Eastman Kodak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IRobot and Eastman Kodak Co, you can compare the effects of market volatilities on IRobot 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 IRobot with a short position of Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRobot and Eastman Kodak.

Diversification Opportunities for IRobot and Eastman Kodak

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between IRobot and Eastman is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding IRobot and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak and IRobot 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 IRobot 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 IRobot i.e., IRobot and Eastman Kodak go up and down completely randomly.

Pair Corralation between IRobot and Eastman Kodak

Given the investment horizon of 90 days IRobot is expected to under-perform the Eastman Kodak. But the stock apears to be less risky and, when comparing its historical volatility, IRobot is 1.13 times less risky than Eastman Kodak. The stock trades about -0.08 of its potential returns per unit of risk. The Eastman Kodak Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  636.00  in Eastman Kodak Co on December 29, 2023 and sell it today you would lose (141.00) from holding Eastman Kodak Co or give up 22.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

IRobot  vs.  Eastman Kodak Co

 Performance 
       Timeline  
IRobot 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days IRobot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in April 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Eastman Kodak 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Kodak Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Eastman Kodak disclosed solid returns over the last few months and may actually be approaching a breakup point.

IRobot and Eastman Kodak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IRobot and Eastman Kodak

The main advantage of trading using opposite IRobot and Eastman Kodak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRobot 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 IRobot 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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