Correlation Between BW Offshore and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both BW Offshore 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 BW Offshore and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Eastman Chemical Co, you can compare the effects of market volatilities on BW Offshore 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 BW Offshore with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Eastman Chemical.
Diversification Opportunities for BW Offshore and Eastman Chemical
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 0RKH and Eastman is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and BW Offshore 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 BW Offshore 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 BW Offshore i.e., BW Offshore and Eastman Chemical go up and down completely randomly.
Pair Corralation between BW Offshore and Eastman Chemical
Assuming the 90 days trading horizon BW Offshore is expected to under-perform the Eastman Chemical. In addition to that, BW Offshore is 1.49 times more volatile than Eastman Chemical Co. It trades about -0.01 of its total potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.05 per unit of volatility. If you would invest 9,695 in Eastman Chemical Co on September 1, 2024 and sell it today you would earn a total of 777.00 from holding Eastman Chemical Co or generate 8.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.12% |
| Values | Daily Returns |
BW Offshore vs. Eastman Chemical Co
Performance |
| Timeline |
| BW Offshore |
| Eastman Chemical |
BW Offshore and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Eastman Chemical
The main advantage of trading using opposite BW Offshore and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore 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.| BW Offshore vs. Microchip Technology | BW Offshore vs. Cizzle Biotechnology Holdings | BW Offshore vs. Advanced Medical Solutions | BW Offshore vs. Allianz Technology Trust |
| Eastman Chemical vs. Ameriprise Financial | Eastman Chemical vs. Silvercorp Metals | Eastman Chemical vs. St Galler Kantonalbank | Eastman Chemical vs. Wyndham Hotels Resorts |
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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