Correlation Between Ebro Foods and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Ebro Foods 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 Ebro Foods and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Eastman Chemical Co, you can compare the effects of market volatilities on Ebro Foods 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 Ebro Foods with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Eastman Chemical.
Diversification Opportunities for Ebro Foods and Eastman Chemical
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and Eastman is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and Eastman Chemical go up and down completely randomly.
Pair Corralation between Ebro Foods and Eastman Chemical
Assuming the 90 days trading horizon Ebro Foods is expected to generate 0.37 times more return on investment than Eastman Chemical. However, Ebro Foods is 2.71 times less risky than Eastman Chemical. It trades about -0.05 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about -0.03 per unit of risk. If you would invest 1,597 in Ebro Foods on September 14, 2024 and sell it today you would lose (8.00) from holding Ebro Foods or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ebro Foods vs. Eastman Chemical Co
Performance |
| Timeline |
| Ebro Foods |
| Eastman Chemical |
Ebro Foods and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Eastman Chemical
The main advantage of trading using opposite Ebro Foods and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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.| Ebro Foods vs. Future Metals NL | Ebro Foods vs. Cornish Metals | Ebro Foods vs. Systemair AB | Ebro Foods vs. Silvercorp Metals |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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