Correlation Between Eastman Chemical and Canon
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Canon 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 Canon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Canon Inc, you can compare the effects of market volatilities on Eastman Chemical and Canon 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 Canon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Canon.
Diversification Opportunities for Eastman Chemical and Canon
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastman and Canon is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc 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 Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Canon go up and down completely randomly.
Pair Corralation between Eastman Chemical and Canon
Assuming the 90 days horizon Eastman Chemical is expected to generate 1.39 times less return on investment than Canon. But when comparing it to its historical volatility, Eastman Chemical is 1.2 times less risky than Canon. It trades about 0.04 of its potential returns per unit of risk. Canon Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,114 in Canon Inc on September 3, 2024 and sell it today you would earn a total of 936.00 from holding Canon Inc or generate 44.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Canon Inc
Performance |
| Timeline |
| Eastman Chemical |
| Canon Inc |
Eastman Chemical and Canon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Canon
The main advantage of trading using opposite Eastman Chemical and Canon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Canon 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 Canon will offset losses from the drop in Canon's long position.| Eastman Chemical vs. Vulcan Materials | Eastman Chemical vs. Broadwind | Eastman Chemical vs. Transportadora de Gas | Eastman Chemical vs. URBAN OUTFITTERS |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |