Correlation Between Eastman Chemical and Paycom Software
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Paycom Software 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 Eastman Chemical and Paycom Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Paycom Software, you can compare the effects of market volatilities on Eastman Chemical and Paycom Software 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 Eastman Chemical with a short position of Paycom Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Paycom Software.
Diversification Opportunities for Eastman Chemical and Paycom Software
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eastman and Paycom is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Paycom Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycom Software and Eastman Chemical 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 Eastman Chemical are associated (or correlated) with Paycom Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paycom Software has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Paycom Software go up and down completely randomly.
Pair Corralation between Eastman Chemical and Paycom Software
Assuming the 90 days trading horizon Eastman Chemical is expected to generate 0.3 times more return on investment than Paycom Software. However, Eastman Chemical is 3.29 times less risky than Paycom Software. It trades about 0.05 of its potential returns per unit of risk. Paycom Software is currently generating about 0.0 per unit of risk. If you would invest 22,021 in Eastman Chemical on October 13, 2024 and sell it today you would earn a total of 5,519 from holding Eastman Chemical or generate 25.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 71.14% |
| Values | Daily Returns |
Eastman Chemical vs. Paycom Software
Performance |
| Timeline |
| Eastman Chemical |
| Paycom Software |
Eastman Chemical and Paycom Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Paycom Software
The main advantage of trading using opposite Eastman Chemical and Paycom Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Paycom Software 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 Paycom Software will offset losses from the drop in Paycom Software's long position.| Eastman Chemical vs. Braskem SA | Eastman Chemical vs. Braskem SA | Eastman Chemical vs. Braskem SA | Eastman Chemical vs. Unipar Carbocloro SA |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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