Correlation Between Eastman Chemical and GoldMining
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on Eastman Chemical and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and GoldMining.
Diversification Opportunities for Eastman Chemical and GoldMining
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastman and GoldMining is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and GoldMining go up and down completely randomly.
Pair Corralation between Eastman Chemical and GoldMining
Assuming the 90 days trading horizon Eastman Chemical Co is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical Co is 1.53 times less risky than GoldMining. The stock trades about -0.23 of its potential returns per unit of risk. The GoldMining is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 120.00 in GoldMining on October 30, 2024 and sell it today you would lose (8.00) from holding GoldMining or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.0% |
| Values | Daily Returns |
Eastman Chemical Co vs. GoldMining
Performance |
| Timeline |
| Eastman Chemical |
| GoldMining |
Eastman Chemical and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and GoldMining
The main advantage of trading using opposite Eastman Chemical and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Eastman Chemical vs. Take Two Interactive Software | Eastman Chemical vs. Sabien Technology Group | Eastman Chemical vs. Sabre Insurance Group | Eastman Chemical vs. Auction Technology Group |
| GoldMining vs. Leroy Seafood Group | GoldMining vs. LPKF Laser Electronics | GoldMining vs. Roebuck Food Group | GoldMining vs. Premier Foods 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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