Correlation Between Vulcan Materials and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials 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 Vulcan Materials and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials Co and Eastman Chemical Co, you can compare the effects of market volatilities on Vulcan Materials 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 Vulcan Materials with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Eastman Chemical.
Diversification Opportunities for Vulcan Materials and Eastman Chemical
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vulcan and Eastman is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Vulcan Materials 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 Vulcan Materials Co 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 Vulcan Materials i.e., Vulcan Materials and Eastman Chemical go up and down completely randomly.
Pair Corralation between Vulcan Materials and Eastman Chemical
Assuming the 90 days trading horizon Vulcan Materials is expected to generate 1.6 times less return on investment than Eastman Chemical. In addition to that, Vulcan Materials is 1.05 times more volatile than Eastman Chemical Co. It trades about 0.04 of its total potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.07 per unit of volatility. If you would invest 8,149 in Eastman Chemical Co on November 8, 2024 and sell it today you would earn a total of 2,121 from holding Eastman Chemical Co or generate 26.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.77% |
| Values | Daily Returns |
Vulcan Materials Co vs. Eastman Chemical Co
Performance |
| Timeline |
| Vulcan Materials |
| Eastman Chemical |
Vulcan Materials and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Eastman Chemical
The main advantage of trading using opposite Vulcan Materials and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials 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.| Vulcan Materials vs. iShares Physical Silver | Vulcan Materials vs. Taiwan Semiconductor Manufacturing | Vulcan Materials vs. Host Hotels Resorts | Vulcan Materials vs. Invesco Physical Silver |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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