Correlation Between Air Products and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products Chemicals and Eastman Chemical Co, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Eastman Chemical.
Diversification Opportunities for Air Products and Eastman Chemical
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and Eastman is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Air Products 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 Air Products Chemicals 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 Air Products i.e., Air Products and Eastman Chemical go up and down completely randomly.
Pair Corralation between Air Products and Eastman Chemical
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 3.69 times more return on investment than Eastman Chemical. However, Air Products is 3.69 times more volatile than Eastman Chemical Co. It trades about 0.03 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.07 per unit of risk. If you would invest 26,780 in Air Products Chemicals on September 1, 2024 and sell it today you would earn a total of 6,449 from holding Air Products Chemicals or generate 24.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.8% |
| Values | Daily Returns |
Air Products Chemicals vs. Eastman Chemical Co
Performance |
| Timeline |
| Air Products Chemicals |
| Eastman Chemical |
Air Products and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Eastman Chemical
The main advantage of trading using opposite Air Products and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. Uniper SE | Air Products vs. London Security Plc | Air Products vs. Triad Group PLC | Air Products vs. World Chess PLC |
| Eastman Chemical vs. Ameriprise Financial | Eastman Chemical vs. Silvercorp Metals | Eastman Chemical vs. St Galler Kantonalbank | Eastman Chemical vs. Wyndham Hotels Resorts |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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