Correlation Between KIMBALL ELECTRONICS and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KIMBALL ELECTRONICS and Eastman Chemical, you can compare the effects of market volatilities on KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and Eastman Chemical.
Diversification Opportunities for KIMBALL ELECTRONICS and Eastman Chemical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between KIMBALL and Eastman is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS 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 KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and Eastman Chemical go up and down completely randomly.
Pair Corralation between KIMBALL ELECTRONICS and Eastman Chemical
Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to under-perform the Eastman Chemical. In addition to that, KIMBALL ELECTRONICS is 1.81 times more volatile than Eastman Chemical. It trades about -0.02 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.09 per unit of volatility. If you would invest 7,441 in Eastman Chemical on September 2, 2024 and sell it today you would earn a total of 2,431 from holding Eastman Chemical or generate 32.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KIMBALL ELECTRONICS vs. Eastman Chemical
Performance |
| Timeline |
| KIMBALL ELECTRONICS |
| Eastman Chemical |
KIMBALL ELECTRONICS and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KIMBALL ELECTRONICS and Eastman Chemical
The main advantage of trading using opposite KIMBALL ELECTRONICS and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS 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.| KIMBALL ELECTRONICS vs. Varta AG | KIMBALL ELECTRONICS vs. Superior Plus Corp | KIMBALL ELECTRONICS vs. Origin Agritech | KIMBALL ELECTRONICS vs. Identiv |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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