Correlation Between Eastman Chemical and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Townsquare Media 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 Townsquare Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Townsquare Media, you can compare the effects of market volatilities on Eastman Chemical and Townsquare Media 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 Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Townsquare Media.
Diversification Opportunities for Eastman Chemical and Townsquare Media
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastman and Townsquare is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media 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 Townsquare Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Townsquare Media has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Townsquare Media go up and down completely randomly.
Pair Corralation between Eastman Chemical and Townsquare Media
Assuming the 90 days horizon Eastman Chemical is expected to generate 0.57 times more return on investment than Townsquare Media. However, Eastman Chemical is 1.77 times less risky than Townsquare Media. It trades about 0.06 of its potential returns per unit of risk. Townsquare Media is currently generating about 0.01 per unit of risk. If you would invest 7,282 in Eastman Chemical on November 8, 2024 and sell it today you would earn a total of 2,476 from holding Eastman Chemical or generate 34.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
Eastman Chemical vs. Townsquare Media
Performance |
| Timeline |
| Eastman Chemical |
| Townsquare Media |
Eastman Chemical and Townsquare Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Townsquare Media
The main advantage of trading using opposite Eastman Chemical and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Townsquare Media 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 Townsquare Media will offset losses from the drop in Townsquare Media's long position.| Eastman Chemical vs. Cardinal Health | Eastman Chemical vs. Minerals Technologies | Eastman Chemical vs. Acadia Healthcare | Eastman Chemical vs. Jacquet Metal Service |
| Townsquare Media vs. DICKS Sporting Goods | Townsquare Media vs. Yuexiu Transport Infrastructure | Townsquare Media vs. Transport International Holdings | Townsquare Media vs. SOEDER SPORTFISKE AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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