Correlation Between Roper Technologies and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Roper Technologies and Eastman Chemical 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 Roper Technologies and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roper Technologies and Eastman Chemical Co, you can compare the effects of market volatilities on Roper Technologies and Eastman Chemical 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 Roper Technologies with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roper Technologies and Eastman Chemical.
Diversification Opportunities for Roper Technologies and Eastman Chemical
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Roper and Eastman is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Roper Technologies 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 Roper Technologies are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Roper Technologies i.e., Roper Technologies and Eastman Chemical go up and down completely randomly.
Pair Corralation between Roper Technologies and Eastman Chemical
Assuming the 90 days trading horizon Roper Technologies is expected to generate 5.6 times more return on investment than Eastman Chemical. However, Roper Technologies is 5.6 times more volatile than Eastman Chemical Co. It trades about 0.03 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.05 per unit of risk. If you would invest 53,726 in Roper Technologies on September 14, 2024 and sell it today you would earn a total of 1,281 from holding Roper Technologies or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.0% |
| Values | Daily Returns |
Roper Technologies vs. Eastman Chemical Co
Performance |
| Timeline |
| Roper Technologies |
| Eastman Chemical |
Roper Technologies and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roper Technologies and Eastman Chemical
The main advantage of trading using opposite Roper Technologies and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roper Technologies position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Roper Technologies vs. Universal Health Services | Roper Technologies vs. Fulcrum Metals PLC | Roper Technologies vs. United Airlines Holdings | Roper Technologies vs. Empire Metals Limited |
| Eastman Chemical vs. Ebro Foods | Eastman Chemical vs. Impax Environmental Markets | Eastman Chemical vs. Grieg Seafood | Eastman Chemical vs. Roebuck Food Group |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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