Correlation Between Eastman Chemical and Porvair Plc
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Porvair 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 Porvair 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 Porvair plc, you can compare the effects of market volatilities on Eastman Chemical and Porvair 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 Porvair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Porvair Plc.
Diversification Opportunities for Eastman Chemical and Porvair Plc
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eastman and Porvair is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and Porvair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porvair 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 Porvair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porvair plc has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Porvair Plc go up and down completely randomly.
Pair Corralation between Eastman Chemical and Porvair Plc
Assuming the 90 days trading horizon Eastman Chemical Co is expected to under-perform the Porvair Plc. In addition to that, Eastman Chemical is 1.33 times more volatile than Porvair plc. It trades about -0.03 of its total potential returns per unit of risk. Porvair plc is currently generating about 0.22 per unit of volatility. If you would invest 65,000 in Porvair plc on September 14, 2024 and sell it today you would earn a total of 3,000 from holding Porvair plc or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eastman Chemical Co vs. Porvair plc
Performance |
| Timeline |
| Eastman Chemical |
| Porvair plc |
Eastman Chemical and Porvair Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Porvair Plc
The main advantage of trading using opposite Eastman Chemical and Porvair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Porvair 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 Porvair Plc will offset losses from the drop in Porvair Plc's long position.| Eastman Chemical vs. Ebro Foods | Eastman Chemical vs. Impax Environmental Markets | Eastman Chemical vs. Grieg Seafood | Eastman Chemical vs. Roebuck Food Group |
| Porvair Plc vs. Spirent Communications plc | Porvair Plc vs. MTI Wireless Edge | Porvair Plc vs. Molson Coors Beverage | Porvair Plc vs. Advanced Medical Solutions |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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