Correlation Between Industrivarden and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Industrivarden and Eastman Chemical 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 Industrivarden and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrivarden AB ser and Eastman Chemical Co, you can compare the effects of market volatilities on Industrivarden and Eastman Chemical 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 Industrivarden with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrivarden and Eastman Chemical.
Diversification Opportunities for Industrivarden and Eastman Chemical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Industrivarden and Eastman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Industrivarden 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 Industrivarden AB ser are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Industrivarden i.e., Industrivarden and Eastman Chemical go up and down completely randomly.
Pair Corralation between Industrivarden and Eastman Chemical
Assuming the 90 days trading horizon Industrivarden AB ser is expected to under-perform the Eastman Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Industrivarden AB ser is 1.37 times less risky than Eastman Chemical. The stock trades about -0.1 of its potential returns per unit of risk. The Eastman Chemical Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,143 in Eastman Chemical Co on September 2, 2024 and sell it today you would earn a total of 329.00 from holding Eastman Chemical Co or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Industrivarden AB ser vs. Eastman Chemical Co
Performance |
| Timeline |
| Industrivarden AB ser |
| Eastman Chemical |
Industrivarden and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrivarden and Eastman Chemical
The main advantage of trading using opposite Industrivarden and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden position performs unexpectedly, Eastman Chemical 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 Chemical will offset losses from the drop in Eastman Chemical's long position.| Industrivarden vs. Sabre Insurance Group | Industrivarden vs. Hochschild Mining plc | Industrivarden vs. Cornish Metals | Industrivarden vs. Zurich Insurance Group |
| Eastman Chemical vs. Uniper SE | Eastman Chemical vs. Mulberry Group PLC | Eastman Chemical vs. London Security Plc | Eastman Chemical vs. Triad Group PLC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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