Correlation Between Albemarle Corp and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Albemarle Corp 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 Albemarle Corp and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albemarle Corp and Eastman Chemical, you can compare the effects of market volatilities on Albemarle Corp 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 Albemarle Corp with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle Corp and Eastman Chemical.
Diversification Opportunities for Albemarle Corp and Eastman Chemical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Albemarle and Eastman is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle Corp and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Albemarle Corp 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 Albemarle 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 Albemarle Corp i.e., Albemarle Corp and Eastman Chemical go up and down completely randomly.
Pair Corralation between Albemarle Corp and Eastman Chemical
Considering the 90-day investment horizon Albemarle Corp is expected to generate 4.32 times less return on investment than Eastman Chemical. In addition to that, Albemarle Corp is 2.03 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 0.19 per unit of volatility. If you would invest 8,852 in Eastman Chemical on November 2, 2024 and sell it today you would earn a total of 415.00 from holding Eastman Chemical or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albemarle Corp vs. Eastman Chemical
Performance |
| Timeline |
| Albemarle Corp |
| Eastman Chemical |
Albemarle Corp and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albemarle Corp and Eastman Chemical
The main advantage of trading using opposite Albemarle Corp and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle Corp 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.| Albemarle Corp vs. Linde plc Ordinary | Albemarle Corp vs. Air Products and | Albemarle Corp vs. Dupont De Nemours | Albemarle Corp vs. Sociedad Quimica y |
| Eastman Chemical vs. Air Products and | Eastman Chemical vs. International Flavors Fragrances | Eastman Chemical vs. Sherwin Williams Co | Eastman Chemical vs. PPG Industries |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |