Correlation Between Eastman Chemical and Zalando SE
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Zalando SE 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 Zalando SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Zalando SE, you can compare the effects of market volatilities on Eastman Chemical and Zalando SE 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 Zalando SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Zalando SE.
Diversification Opportunities for Eastman Chemical and Zalando SE
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eastman and Zalando is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Zalando SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalando SE 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 Zalando SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zalando SE has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Zalando SE go up and down completely randomly.
Pair Corralation between Eastman Chemical and Zalando SE
Assuming the 90 days horizon Eastman Chemical is expected to generate 0.56 times more return on investment than Zalando SE. However, Eastman Chemical is 1.77 times less risky than Zalando SE. It trades about 0.05 of its potential returns per unit of risk. Zalando SE is currently generating about 0.01 per unit of risk. If you would invest 7,436 in Eastman Chemical on August 30, 2024 and sell it today you would earn a total of 2,654 from holding Eastman Chemical or generate 35.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Zalando SE
Performance |
| Timeline |
| Eastman Chemical |
| Zalando SE |
Eastman Chemical and Zalando SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Zalando SE
The main advantage of trading using opposite Eastman Chemical and Zalando SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Zalando SE 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 Zalando SE will offset losses from the drop in Zalando SE's long position.| Eastman Chemical vs. Air Liquide SA | Eastman Chemical vs. Air Products and | Eastman Chemical vs. Shin Etsu Chemical Co | Eastman Chemical vs. BASF SE |
| Zalando SE vs. ALTAIR RES INC | Zalando SE vs. RYU Apparel | Zalando SE vs. MYFAIR GOLD P | Zalando SE vs. HF SINCLAIR P |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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