Correlation Between Eastman Chemical and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Ameriprise Financial 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 Ameriprise Financial 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 Ameriprise Financial, you can compare the effects of market volatilities on Eastman Chemical and Ameriprise Financial 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 Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Ameriprise Financial.
Diversification Opportunities for Eastman Chemical and Ameriprise Financial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eastman and Ameriprise is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Eastman Chemical and Ameriprise Financial
Assuming the 90 days trading horizon Eastman Chemical Co is expected to under-perform the Ameriprise Financial. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical Co is 1.77 times less risky than Ameriprise Financial. The stock trades about -0.15 of its potential returns per unit of risk. The Ameriprise Financial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 52,014 in Ameriprise Financial on August 24, 2024 and sell it today you would earn a total of 3,974 from holding Ameriprise Financial or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical Co vs. Ameriprise Financial
Performance |
| Timeline |
| Eastman Chemical |
| Ameriprise Financial |
Eastman Chemical and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Ameriprise Financial
The main advantage of trading using opposite Eastman Chemical and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.| Eastman Chemical vs. X FAB Silicon Foundries | Eastman Chemical vs. Ocean Harvest Technology | Eastman Chemical vs. Spotify Technology SA | Eastman Chemical vs. Panther Metals PLC |
| Ameriprise Financial vs. Quadrise Plc | Ameriprise Financial vs. Intuitive Investments Group | Ameriprise Financial vs. European Metals Holdings | Ameriprise Financial vs. Athelney Trust 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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