Correlation Between Cracker Barrel and Eastman Kodak

Can any of the company-specific risk be diversified away by investing in both Cracker Barrel 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 Cracker Barrel and Eastman Kodak into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cracker Barrel Old and Eastman Kodak Co, you can compare the effects of market volatilities on Cracker Barrel 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 Cracker Barrel with a short position of Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Eastman Kodak.

Diversification Opportunities for Cracker Barrel and Eastman Kodak

0.61

Correlation Coefficient

Cracker Barrel  Eastman Kodak

Poor diversification

The 3 months correlation between Cracker and Eastman is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak and Cracker Barrel 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 Cracker Barrel Old 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 Cracker Barrel i.e., Cracker Barrel and Eastman Kodak go up and down completely randomly.

Pair Corralation between Cracker Barrel and Eastman Kodak

Given the investment horizon of 90 days Cracker Barrel Old is expected to generate 0.72 times more return on investment than Eastman Kodak. However, Cracker Barrel Old is 1.4 times less risky than Eastman Kodak. It trades about 0.18 of its potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.13 per unit of risk. If you would invest  3,645  in Cracker Barrel Old on September 12, 2024 and sell it today you would earn a total of  1,559  from holding Cracker Barrel Old or generate 42.77% return on investment over 90 days.

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

Cracker Barrel Old  vs.  Eastman Kodak Co

Cracker Barrel Old

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cracker Barrel Old are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Cracker Barrel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Eastman Kodak

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Kodak Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Eastman Kodak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cracker Barrel and Eastman Kodak

The main advantage of trading using opposite Cracker Barrel and Eastman Kodak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel 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 Cracker Barrel Old 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.