Correlation Between Broadwind and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Broadwind 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 Broadwind and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind and Eastman Chemical, you can compare the effects of market volatilities on Broadwind 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 Broadwind with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and Eastman Chemical.
Diversification Opportunities for Broadwind and Eastman Chemical
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Broadwind and Eastman is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Broadwind 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 Broadwind 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 Broadwind i.e., Broadwind and Eastman Chemical go up and down completely randomly.
Pair Corralation between Broadwind and Eastman Chemical
Assuming the 90 days trading horizon Broadwind is expected to under-perform the Eastman Chemical. In addition to that, Broadwind is 3.19 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 0.0 per unit of volatility. If you would invest 9,922 in Eastman Chemical on September 3, 2024 and sell it today you would lose (50.00) from holding Eastman Chemical or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadwind vs. Eastman Chemical
Performance |
| Timeline |
| Broadwind |
| Eastman Chemical |
Broadwind and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadwind and Eastman Chemical
The main advantage of trading using opposite Broadwind and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind 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.| Broadwind vs. SIEMENS AG SP | Broadwind vs. Siemens Aktiengesellschaft | Broadwind vs. Siemens Aktiengesellschaft | Broadwind vs. Schneider Electric SE |
| Eastman Chemical vs. Vulcan Materials | Eastman Chemical vs. Broadwind | Eastman Chemical vs. Transportadora de Gas | Eastman Chemical vs. URBAN OUTFITTERS |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |