Correlation Between Eastman Chemical and Tavistock Investments
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Tavistock Investments 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 Tavistock Investments 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 Tavistock Investments Plc, you can compare the effects of market volatilities on Eastman Chemical and Tavistock Investments 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 Tavistock Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Tavistock Investments.
Diversification Opportunities for Eastman Chemical and Tavistock Investments
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastman and Tavistock is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and Tavistock Investments Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tavistock Investments 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 Tavistock Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tavistock Investments Plc has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Tavistock Investments go up and down completely randomly.
Pair Corralation between Eastman Chemical and Tavistock Investments
Assuming the 90 days trading horizon Eastman Chemical Co is expected to generate 1.48 times more return on investment than Tavistock Investments. However, Eastman Chemical is 1.48 times more volatile than Tavistock Investments Plc. It trades about 0.26 of its potential returns per unit of risk. Tavistock Investments Plc is currently generating about -0.3 per unit of risk. If you would invest 8,897 in Eastman Chemical Co on November 7, 2024 and sell it today you would earn a total of 1,013 from holding Eastman Chemical Co or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Eastman Chemical Co vs. Tavistock Investments Plc
Performance |
| Timeline |
| Eastman Chemical |
| Tavistock Investments Plc |
Eastman Chemical and Tavistock Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Tavistock Investments
The main advantage of trading using opposite Eastman Chemical and Tavistock Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Tavistock Investments 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 Tavistock Investments will offset losses from the drop in Tavistock Investments' long position.| Eastman Chemical vs. International Biotechnology Trust | Eastman Chemical vs. Austevoll Seafood ASA | Eastman Chemical vs. Cognizant Technology Solutions | Eastman Chemical vs. Spotify Technology SA |
| Tavistock Investments vs. Adriatic Metals | Tavistock Investments vs. Golden Metal Resources | Tavistock Investments vs. Rheinmetall AG | Tavistock Investments vs. Atalaya Mining |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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