Correlation Between Canlan Ice and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Canlan Ice 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 Canlan Ice and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canlan Ice Sports and Eastman Chemical, you can compare the effects of market volatilities on Canlan Ice 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 Canlan Ice with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canlan Ice and Eastman Chemical.
Diversification Opportunities for Canlan Ice and Eastman Chemical
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canlan and Eastman is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Canlan Ice 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 Canlan Ice Sports 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 Canlan Ice i.e., Canlan Ice and Eastman Chemical go up and down completely randomly.
Pair Corralation between Canlan Ice and Eastman Chemical
Assuming the 90 days horizon Canlan Ice is expected to generate 4.43 times less return on investment than Eastman Chemical. But when comparing it to its historical volatility, Canlan Ice Sports is 15.18 times less risky than Eastman Chemical. It trades about 0.13 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,193 in Eastman Chemical on September 3, 2024 and sell it today you would earn a total of 2,279 from holding Eastman Chemical or generate 27.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canlan Ice Sports vs. Eastman Chemical
Performance |
| Timeline |
| Canlan Ice Sports |
| Eastman Chemical |
Canlan Ice and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canlan Ice and Eastman Chemical
The main advantage of trading using opposite Canlan Ice and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canlan Ice 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.| Canlan Ice vs. Weibo Corp | Canlan Ice vs. WiMi Hologram Cloud | Canlan Ice vs. 51Talk Online Education | Canlan Ice vs. Relx PLC ADR |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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