Correlation Between Eastman Chemical and Eneraqua Technologies
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Eneraqua Technologies 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 Eneraqua Technologies 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 Eneraqua Technologies PLC, you can compare the effects of market volatilities on Eastman Chemical and Eneraqua Technologies 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 Eneraqua Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Eneraqua Technologies.
Diversification Opportunities for Eastman Chemical and Eneraqua Technologies
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastman and Eneraqua is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and Eneraqua Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneraqua Technologies 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 Eneraqua Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneraqua Technologies PLC has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Eneraqua Technologies go up and down completely randomly.
Pair Corralation between Eastman Chemical and Eneraqua Technologies
Assuming the 90 days trading horizon Eastman Chemical Co is expected to generate 0.63 times more return on investment than Eneraqua Technologies. However, Eastman Chemical Co is 1.58 times less risky than Eneraqua Technologies. It trades about 0.03 of its potential returns per unit of risk. Eneraqua Technologies PLC is currently generating about -0.01 per unit of risk. If you would invest 9,514 in Eastman Chemical Co on November 4, 2024 and sell it today you would earn a total of 396.00 from holding Eastman Chemical Co or generate 4.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.03% |
| Values | Daily Returns |
Eastman Chemical Co vs. Eneraqua Technologies PLC
Performance |
| Timeline |
| Eastman Chemical |
| Eneraqua Technologies PLC |
Eastman Chemical and Eneraqua Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Eneraqua Technologies
The main advantage of trading using opposite Eastman Chemical and Eneraqua Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Eneraqua Technologies 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 Eneraqua Technologies will offset losses from the drop in Eneraqua Technologies' long position.| Eastman Chemical vs. Summit Materials Cl | Eastman Chemical vs. Applied Materials | Eastman Chemical vs. Zegona Communications Plc | Eastman Chemical vs. Spirent Communications plc |
| Eneraqua Technologies vs. Berkshire Hathaway | Eneraqua Technologies vs. Samsung Electronics Co | Eneraqua Technologies vs. Samsung Electronics Co | Eneraqua Technologies vs. Chocoladefabriken Lindt Spruengli |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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