Correlation Between SoftBank Group and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both SoftBank Group 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 SoftBank Group and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and Eastman Chemical Co, you can compare the effects of market volatilities on SoftBank Group 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 SoftBank Group with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Eastman Chemical.
Diversification Opportunities for SoftBank Group and Eastman Chemical
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SoftBank and Eastman is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and SoftBank Group 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 SoftBank Group Corp 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 SoftBank Group i.e., SoftBank Group and Eastman Chemical go up and down completely randomly.
Pair Corralation between SoftBank Group and Eastman Chemical
Assuming the 90 days trading horizon SoftBank Group is expected to generate 3.31 times less return on investment than Eastman Chemical. In addition to that, SoftBank Group is 2.09 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 0.26 per unit of volatility. If you would invest 8,860 in Eastman Chemical Co on November 3, 2024 and sell it today you would earn a total of 1,050 from holding Eastman Chemical Co or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
SoftBank Group Corp vs. Eastman Chemical Co
Performance |
| Timeline |
| SoftBank Group Corp |
| Eastman Chemical |
SoftBank Group and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Eastman Chemical
The main advantage of trading using opposite SoftBank Group and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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.| SoftBank Group vs. Eco Animal Health | SoftBank Group vs. EJF Investments | SoftBank Group vs. Bankers Investment Trust | SoftBank Group vs. Scandinavian Tobacco Group |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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