Correlation Between Brinker International and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Brinker International and Eastman Chemical 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 Brinker International and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Eastman Chemical, you can compare the effects of market volatilities on Brinker International and Eastman Chemical 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 Brinker International with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Eastman Chemical.
Diversification Opportunities for Brinker International and Eastman Chemical
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brinker and Eastman is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Brinker International 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 Brinker International are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Brinker International i.e., Brinker International and Eastman Chemical go up and down completely randomly.
Pair Corralation between Brinker International and Eastman Chemical
Considering the 90-day investment horizon Brinker International is expected to generate 1.55 times more return on investment than Eastman Chemical. However, Brinker International is 1.55 times more volatile than Eastman Chemical. It trades about 0.13 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.04 per unit of risk. If you would invest 3,308 in Brinker International on September 12, 2024 and sell it today you would earn a total of 9,762 from holding Brinker International or generate 295.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Eastman Chemical
Performance |
| Timeline |
| Brinker International |
| Eastman Chemical |
Brinker International and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Eastman Chemical
The main advantage of trading using opposite Brinker International and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Brinker International vs. Noble Romans | Brinker International vs. Good Times Restaurants | Brinker International vs. Flanigans Enterprises | Brinker International vs. FAT Brands |
| Eastman Chemical vs. Griffon | Eastman Chemical vs. Merck Company | Eastman Chemical vs. Brinker International | Eastman Chemical vs. Alcoa Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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