Correlation Between Eastman Chemical and Arq
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Arq 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 Arq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Arq Inc, you can compare the effects of market volatilities on Eastman Chemical and Arq 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 Arq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Arq.
Diversification Opportunities for Eastman Chemical and Arq
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eastman and Arq is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Arq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arq 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 Arq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arq Inc has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Arq go up and down completely randomly.
Pair Corralation between Eastman Chemical and Arq
Considering the 90-day investment horizon Eastman Chemical is expected to under-perform the Arq. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical is 2.3 times less risky than Arq. The stock trades about -0.03 of its potential returns per unit of risk. The Arq Inc is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 577.00 in Arq Inc on August 24, 2024 and sell it today you would earn a total of 180.00 from holding Arq Inc or generate 31.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Arq Inc
Performance |
| Timeline |
| Eastman Chemical |
| Arq Inc |
Eastman Chemical and Arq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Arq
The main advantage of trading using opposite Eastman Chemical and Arq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Arq 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 Arq will offset losses from the drop in Arq's long position.| Eastman Chemical vs. Eshallgo Class A | Eastman Chemical vs. Amtech Systems | Eastman Chemical vs. Gold Fields Ltd | Eastman Chemical vs. Aegean Airlines SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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