Correlation Between Eastman Chemical and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Sumitomo Mitsui 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 Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Eastman Chemical and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Sumitomo Mitsui.
Diversification Opportunities for Eastman Chemical and Sumitomo Mitsui
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastman and Sumitomo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Eastman Chemical and Sumitomo Mitsui
Assuming the 90 days trading horizon Eastman Chemical is expected to generate 0.16 times more return on investment than Sumitomo Mitsui. However, Eastman Chemical is 6.34 times less risky than Sumitomo Mitsui. It trades about 0.24 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.02 per unit of risk. If you would invest 27,365 in Eastman Chemical on October 12, 2024 and sell it today you would earn a total of 175.00 from holding Eastman Chemical or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Eastman Chemical |
| Sumitomo Mitsui Financial |
Eastman Chemical and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Sumitomo Mitsui
The main advantage of trading using opposite Eastman Chemical and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Eastman Chemical vs. JB Hunt Transport | Eastman Chemical vs. Micron Technology | Eastman Chemical vs. Cognizant Technology Solutions | Eastman Chemical vs. DENTSPLY SIRONA |
| Sumitomo Mitsui vs. Waste Management | Sumitomo Mitsui vs. METISA Metalrgica Timboense | Sumitomo Mitsui vs. Eastman Chemical | Sumitomo Mitsui vs. Charter Communications |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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