Correlation Between Eastman Chemical and Allstate
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Allstate 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 Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and The Allstate, you can compare the effects of market volatilities on Eastman Chemical and Allstate 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 Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Allstate.
Diversification Opportunities for Eastman Chemical and Allstate
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eastman and Allstate is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Allstate go up and down completely randomly.
Pair Corralation between Eastman Chemical and Allstate
Assuming the 90 days horizon Eastman Chemical is expected to generate 2.17 times less return on investment than Allstate. But when comparing it to its historical volatility, Eastman Chemical is 1.08 times less risky than Allstate. It trades about 0.06 of its potential returns per unit of risk. The Allstate is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 12,318 in The Allstate on September 12, 2024 and sell it today you would earn a total of 6,867 from holding The Allstate or generate 55.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. The Allstate
Performance |
| Timeline |
| Eastman Chemical |
| Allstate |
Eastman Chemical and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Allstate
The main advantage of trading using opposite Eastman Chemical and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.| Eastman Chemical vs. AIR LIQUIDE ADR | Eastman Chemical vs. Shin Etsu Chemical Co | Eastman Chemical vs. Ganfeng Lithium Co | Eastman Chemical vs. Superior Plus Corp |
| Allstate vs. KINGBOARD CHEMICAL | Allstate vs. Mitsubishi Gas Chemical | Allstate vs. Quaker Chemical | Allstate vs. Eastman Chemical |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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