Correlation Between MACOM Technology and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both MACOM Technology 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 MACOM Technology and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Eastman Chemical, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Eastman Chemical.
Diversification Opportunities for MACOM Technology and Eastman Chemical
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MACOM and Eastman is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Eastman Chemical go up and down completely randomly.
Pair Corralation between MACOM Technology and Eastman Chemical
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.69 times more return on investment than Eastman Chemical. However, MACOM Technology is 1.69 times more volatile than Eastman Chemical. It trades about -0.01 of its potential returns per unit of risk. Eastman Chemical is currently generating about -0.47 per unit of risk. If you would invest 13,200 in MACOM Technology Solutions on October 14, 2024 and sell it today you would lose (100.00) from holding MACOM Technology Solutions or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Eastman Chemical
Performance |
| Timeline |
| MACOM Technology Sol |
| Eastman Chemical |
MACOM Technology and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Eastman Chemical
The main advantage of trading using opposite MACOM Technology and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.| MACOM Technology vs. FAST RETAIL ADR | MACOM Technology vs. JLF INVESTMENT | MACOM Technology vs. RETAIL FOOD GROUP | MACOM Technology vs. Costco Wholesale Corp |
| Eastman Chemical vs. MACOM Technology Solutions | Eastman Chemical vs. AECOM TECHNOLOGY | Eastman Chemical vs. SMA Solar Technology | Eastman Chemical vs. UPDATE SOFTWARE |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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