Correlation Between Eastman Chemical and Seagate Technology
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Seagate Technology 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 Seagate Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Seagate Technology Holdings, you can compare the effects of market volatilities on Eastman Chemical and Seagate Technology 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 Seagate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Seagate Technology.
Diversification Opportunities for Eastman Chemical and Seagate Technology
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastman and Seagate is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Seagate Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology 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 Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Seagate Technology go up and down completely randomly.
Pair Corralation between Eastman Chemical and Seagate Technology
Assuming the 90 days trading horizon Eastman Chemical is expected to generate 0.07 times more return on investment than Seagate Technology. However, Eastman Chemical is 14.53 times less risky than Seagate Technology. It trades about 0.24 of its potential returns per unit of risk. Seagate Technology Holdings is currently generating about -0.18 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Seagate Technology Holdings
Performance |
| Timeline |
| Eastman Chemical |
| Seagate Technology |
Eastman Chemical and Seagate Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Seagate Technology
The main advantage of trading using opposite Eastman Chemical and Seagate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Seagate Technology 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 Seagate Technology will offset losses from the drop in Seagate Technology's long position.| Eastman Chemical vs. Seagate Technology Holdings | Eastman Chemical vs. Liberty Broadband | Eastman Chemical vs. Marvell Technology | Eastman Chemical vs. United Natural Foods, |
| Seagate Technology vs. Arista Networks | Seagate Technology vs. Dell Technologies | Seagate Technology vs. Positivo Tecnologia SA |
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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