Correlation Between Eastman Chemical and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and DXC Technology 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 DXC Technology 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 DXC Technology Co, you can compare the effects of market volatilities on Eastman Chemical and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and DXC Technology.
Diversification Opportunities for Eastman Chemical and DXC Technology
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastman and DXC is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and DXC Technology go up and down completely randomly.
Pair Corralation between Eastman Chemical and DXC Technology
Assuming the 90 days trading horizon Eastman Chemical Co is expected to generate 0.63 times more return on investment than DXC Technology. However, Eastman Chemical Co is 1.59 times less risky than DXC Technology. It trades about 0.04 of its potential returns per unit of risk. DXC Technology Co is currently generating about 0.0 per unit of risk. If you would invest 8,482 in Eastman Chemical Co on September 3, 2024 and sell it today you would earn a total of 1,990 from holding Eastman Chemical Co or generate 23.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.14% |
| Values | Daily Returns |
Eastman Chemical Co vs. DXC Technology Co
Performance |
| Timeline |
| Eastman Chemical |
| DXC Technology |
Eastman Chemical and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and DXC Technology
The main advantage of trading using opposite Eastman Chemical and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology'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 |
| DXC Technology vs. Home Depot | DXC Technology vs. Synthomer plc | DXC Technology vs. DFS Furniture PLC | DXC Technology vs. Westlake Chemical Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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