Correlation Between Eastman Kodak and Hawkins

Can any of the company-specific risk be diversified away by investing in both Eastman Kodak and Hawkins 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 Hawkins 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 Hawkins, you can compare the effects of market volatilities on Eastman Kodak and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Kodak and Hawkins.

Diversification Opportunities for Eastman Kodak and Hawkins

0.49

Correlation Coefficient

Eastman Kodak  Hawkins

Very weak diversification

The 3 months correlation between Eastman and Hawkins is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Kodak Co and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Eastman Kodak i.e., Eastman Kodak and Hawkins go up and down completely randomly.

Pair Corralation between Eastman Kodak and Hawkins

Given the investment horizon of 90 days Eastman Kodak is expected to generate 1.24 times less return on investment than Hawkins. In addition to that, Eastman Kodak is 1.74 times more volatile than Hawkins. It trades about 0.06 of its total potential returns per unit of risk. Hawkins is currently generating about 0.12 per unit of volatility. If you would invest  3,847  in Hawkins on September 5, 2024 and sell it today you would earn a total of  9,879  from holding Hawkins or generate 256.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Eastman Kodak Co  vs.  Hawkins

Eastman Kodak

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Kodak Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, Eastman Kodak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Hawkins

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward-looking signals, Hawkins displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastman Kodak and Hawkins

The main advantage of trading using opposite Eastman Kodak and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Kodak position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.

The idea behind Eastman Kodak Co and Hawkins 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.