Correlation Between Eastman Chemical and Corteva
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Corteva 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 Corteva into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Corteva, you can compare the effects of market volatilities on Eastman Chemical and Corteva 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 Corteva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Corteva.
Diversification Opportunities for Eastman Chemical and Corteva
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastman and Corteva is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva 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 Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Corteva go up and down completely randomly.
Pair Corralation between Eastman Chemical and Corteva
Assuming the 90 days horizon Eastman Chemical is expected to generate 0.58 times more return on investment than Corteva. However, Eastman Chemical is 1.73 times less risky than Corteva. It trades about 0.04 of its potential returns per unit of risk. Corteva is currently generating about 0.02 per unit of risk. If you would invest 7,716 in Eastman Chemical on September 4, 2024 and sell it today you would earn a total of 2,156 from holding Eastman Chemical or generate 27.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Eastman Chemical vs. Corteva
Performance |
| Timeline |
| Eastman Chemical |
| Corteva |
Eastman Chemical and Corteva Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Corteva
The main advantage of trading using opposite Eastman Chemical and Corteva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Corteva 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 Corteva will offset losses from the drop in Corteva's long position.| Eastman Chemical vs. AIR LIQUIDE ADR | Eastman Chemical vs. BASF SE | Eastman Chemical vs. BASF SE | Eastman Chemical vs. BASF SE |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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