Correlation Between Eastman Chemical and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and BW Offshore 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 BW Offshore 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 BW Offshore, you can compare the effects of market volatilities on Eastman Chemical and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and BW Offshore.
Diversification Opportunities for Eastman Chemical and BW Offshore
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastman and 0RKH is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and BW Offshore go up and down completely randomly.
Pair Corralation between Eastman Chemical and BW Offshore
Assuming the 90 days trading horizon Eastman Chemical Co is expected to generate 0.53 times more return on investment than BW Offshore. However, Eastman Chemical Co is 1.88 times less risky than BW Offshore. It trades about 0.0 of its potential returns per unit of risk. BW Offshore is currently generating about -0.04 per unit of risk. If you would invest 10,514 in Eastman Chemical Co on September 1, 2024 and sell it today you would lose (42.00) from holding Eastman Chemical Co or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eastman Chemical Co vs. BW Offshore
Performance |
| Timeline |
| Eastman Chemical |
| BW Offshore |
Eastman Chemical and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and BW Offshore
The main advantage of trading using opposite Eastman Chemical and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Eastman Chemical vs. Ameriprise Financial | Eastman Chemical vs. Silvercorp Metals | Eastman Chemical vs. St Galler Kantonalbank | Eastman Chemical vs. Wyndham Hotels Resorts |
| BW Offshore vs. Microchip Technology | BW Offshore vs. Cizzle Biotechnology Holdings | BW Offshore vs. Advanced Medical Solutions | BW Offshore vs. Allianz Technology Trust |
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 Stocks Directory module to find actively traded stocks across global markets.
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