Correlation Between Eastman Chemical and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Consolidated Communications 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 Consolidated Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Consolidated Communications Holdings, you can compare the effects of market volatilities on Eastman Chemical and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Consolidated Communications.
Diversification Opportunities for Eastman Chemical and Consolidated Communications
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastman and Consolidated is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Consolidated Communications go up and down completely randomly.
Pair Corralation between Eastman Chemical and Consolidated Communications
Assuming the 90 days horizon Eastman Chemical is expected to generate 1.39 times more return on investment than Consolidated Communications. However, Eastman Chemical is 1.39 times more volatile than Consolidated Communications Holdings. It trades about 0.08 of its potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.07 per unit of risk. If you would invest 7,150 in Eastman Chemical on September 14, 2024 and sell it today you would earn a total of 2,234 from holding Eastman Chemical or generate 31.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Consolidated Communications Ho
Performance |
| Timeline |
| Eastman Chemical |
| Consolidated Communications |
Eastman Chemical and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Consolidated Communications
The main advantage of trading using opposite Eastman Chemical and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| Eastman Chemical vs. SMA Solar Technology | Eastman Chemical vs. AECOM TECHNOLOGY | Eastman Chemical vs. Cogent Communications Holdings | Eastman Chemical vs. Ribbon Communications |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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