Correlation Between Eastman Chemical and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Air Liquide 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 Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Air Liquide SA, you can compare the effects of market volatilities on Eastman Chemical and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Air Liquide.
Diversification Opportunities for Eastman Chemical and Air Liquide
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eastman and Air is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Air Liquide go up and down completely randomly.
Pair Corralation between Eastman Chemical and Air Liquide
Assuming the 90 days horizon Eastman Chemical is expected to generate 1.37 times more return on investment than Air Liquide. However, Eastman Chemical is 1.37 times more volatile than Air Liquide SA. It trades about 0.04 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.04 per unit of risk. If you would invest 9,153 in Eastman Chemical on September 1, 2024 and sell it today you would earn a total of 691.00 from holding Eastman Chemical or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Eastman Chemical vs. Air Liquide SA
Performance |
| Timeline |
| Eastman Chemical |
| Air Liquide SA |
Eastman Chemical and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Air Liquide
The main advantage of trading using opposite Eastman Chemical and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| Eastman Chemical vs. POWER METALS | Eastman Chemical vs. AOYAMA TRADING | Eastman Chemical vs. Genco Shipping Trading | Eastman Chemical vs. Kaiser Aluminum |
| Air Liquide vs. Heartland Financial USA | Air Liquide vs. SCANDMEDICAL SOLDK 040 | Air Liquide vs. Chiba Bank | Air Liquide vs. United Rentals |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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