Correlation Between Eastman Chemical and Elementis PLC
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Elementis PLC 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 Elementis PLC 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 Elementis PLC, you can compare the effects of market volatilities on Eastman Chemical and Elementis PLC 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 Elementis PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Elementis PLC.
Diversification Opportunities for Eastman Chemical and Elementis PLC
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eastman and Elementis is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and Elementis PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elementis 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 Elementis PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elementis PLC has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Elementis PLC go up and down completely randomly.
Pair Corralation between Eastman Chemical and Elementis PLC
Assuming the 90 days trading horizon Eastman Chemical Co is expected to generate 0.85 times more return on investment than Elementis PLC. However, Eastman Chemical Co is 1.18 times less risky than Elementis PLC. It trades about 0.26 of its potential returns per unit of risk. Elementis PLC is currently generating about 0.22 per unit of risk. If you would invest 8,871 in Eastman Chemical Co on November 4, 2024 and sell it today you would earn a total of 1,039 from holding Eastman Chemical Co or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Eastman Chemical Co vs. Elementis PLC
Performance |
| Timeline |
| Eastman Chemical |
| Elementis PLC |
Eastman Chemical and Elementis PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Elementis PLC
The main advantage of trading using opposite Eastman Chemical and Elementis PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Elementis PLC 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 Elementis PLC will offset losses from the drop in Elementis PLC's long position.| Eastman Chemical vs. Samsung Electronics Co | Eastman Chemical vs. Samsung Electronics Co | Eastman Chemical vs. Toyota Motor Corp | Eastman Chemical vs. Reliance Industries Ltd |
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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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