Correlation Between Charter Communications and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications Cl and Eastman Chemical Co, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Eastman Chemical.
Diversification Opportunities for Charter Communications and Eastman Chemical
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charter and Eastman is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Charter Communications 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 Charter Communications Cl 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 Charter Communications i.e., Charter Communications and Eastman Chemical go up and down completely randomly.
Pair Corralation between Charter Communications and Eastman Chemical
Assuming the 90 days trading horizon Charter Communications Cl is expected to generate 1.62 times more return on investment than Eastman Chemical. However, Charter Communications is 1.62 times more volatile than Eastman Chemical Co. It trades about 0.1 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.03 per unit of risk. If you would invest 27,422 in Charter Communications Cl on September 3, 2024 and sell it today you would earn a total of 11,973 from holding Charter Communications Cl or generate 43.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.29% |
| Values | Daily Returns |
Charter Communications Cl vs. Eastman Chemical Co
Performance |
| Timeline |
| Charter Communications |
| Eastman Chemical |
Charter Communications and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Eastman Chemical
The main advantage of trading using opposite Charter Communications and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Catalyst Media Group | Charter Communications vs. CATLIN GROUP | Charter Communications vs. Magnora ASA | Charter Communications vs. RTW Venture Fund |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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