Correlation Between Eastman Chemical and Endo International

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Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Endo International 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 Endo International 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 Endo International PLC, you can compare the effects of market volatilities on Eastman Chemical and Endo International 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 Endo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Endo International.

Diversification Opportunities for Eastman Chemical and Endo International

EastmanEndoDiversified AwayEastmanEndoDiversified Away100%
0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Eastman and Endo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and Endo International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endo International PLC 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 Endo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endo International PLC has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Endo International go up and down completely randomly.

Pair Corralation between Eastman Chemical and Endo International

Assuming the 90 days trading horizon Eastman Chemical Co is expected to generate 2.55 times more return on investment than Endo International. However, Eastman Chemical is 2.55 times more volatile than Endo International PLC. It trades about 0.24 of its potential returns per unit of risk. Endo International PLC is currently generating about 0.41 per unit of risk. If you would invest  9,372  in Eastman Chemical Co on November 21, 2024 and sell it today you would earn a total of  943.00  from holding Eastman Chemical Co or generate 10.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

Eastman Chemical Co  vs.  Endo International PLC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.150IF3 0Y5F
       Timeline  
Eastman Chemical 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Chemical Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eastman Chemical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb9095100105
Endo International PLC 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Endo International PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Endo International may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb600610620630640650660670680

Eastman Chemical and Endo International Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.33-3.99-2.65-1.310.011.322.664.05.34 0.10.20.30.4
JavaScript chart by amCharts 3.21.150IF3 0Y5F
       Returns  

Pair Trading with Eastman Chemical and Endo International

The main advantage of trading using opposite Eastman Chemical and Endo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Endo International 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 Endo International will offset losses from the drop in Endo International's long position.
The idea behind Eastman Chemical Co and Endo International PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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