Correlation Between Eastman Chemical and Ion Beam
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Ion Beam 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 Chemical and Ion Beam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical Co and Ion Beam Applications, you can compare the effects of market volatilities on Eastman Chemical and Ion Beam 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 Chemical with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Ion Beam.
Diversification Opportunities for Eastman Chemical and Ion Beam
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastman and Ion is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and Eastman Chemical 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 Chemical Co are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Ion Beam go up and down completely randomly.
Pair Corralation between Eastman Chemical and Ion Beam
Assuming the 90 days trading horizon Eastman Chemical Co is expected to generate 0.77 times more return on investment than Ion Beam. However, Eastman Chemical Co is 1.31 times less risky than Ion Beam. It trades about 0.04 of its potential returns per unit of risk. Ion Beam Applications is currently generating about 0.0 per unit of risk. If you would invest 8,291 in Eastman Chemical Co on September 3, 2024 and sell it today you would earn a total of 2,093 from holding Eastman Chemical Co or generate 25.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.96% |
| Values | Daily Returns |
Eastman Chemical Co vs. Ion Beam Applications
Performance |
| Timeline |
| Eastman Chemical |
| Ion Beam Applications |
Eastman Chemical and Ion Beam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Ion Beam
The main advantage of trading using opposite Eastman Chemical and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Ion Beam 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 Ion Beam will offset losses from the drop in Ion Beam's long position.| Eastman Chemical vs. Live Nation Entertainment | Eastman Chemical vs. Wyndham Hotels Resorts | Eastman Chemical vs. Scandic Hotels Group | Eastman Chemical vs. Centaur Media |
| Ion Beam vs. Catalyst Media Group | Ion Beam vs. CATLIN GROUP | Ion Beam vs. RTW Venture Fund | Ion Beam vs. Secure Property Development |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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