Correlation Between Eastman Chemical and Grupo Aeroportuario
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Grupo Aeroportuario 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 Grupo Aeroportuario into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Grupo Aeroportuario del, you can compare the effects of market volatilities on Eastman Chemical and Grupo Aeroportuario 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 Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Grupo Aeroportuario.
Diversification Opportunities for Eastman Chemical and Grupo Aeroportuario
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastman and Grupo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Grupo Aeroportuario go up and down completely randomly.
Pair Corralation between Eastman Chemical and Grupo Aeroportuario
Considering the 90-day investment horizon Eastman Chemical is expected to generate 0.56 times more return on investment than Grupo Aeroportuario. However, Eastman Chemical is 1.78 times less risky than Grupo Aeroportuario. It trades about 0.08 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about 0.03 per unit of risk. If you would invest 8,224 in Eastman Chemical on September 2, 2024 and sell it today you would earn a total of 2,248 from holding Eastman Chemical or generate 27.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Grupo Aeroportuario del
Performance |
| Timeline |
| Eastman Chemical |
| Grupo Aeroportuario del |
Eastman Chemical and Grupo Aeroportuario Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Grupo Aeroportuario
The main advantage of trading using opposite Eastman Chemical and Grupo Aeroportuario positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Grupo Aeroportuario 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 Grupo Aeroportuario will offset losses from the drop in Grupo Aeroportuario's long position.| Eastman Chemical vs. Air Products and | Eastman Chemical vs. International Flavors Fragrances | Eastman Chemical vs. Sherwin Williams Co | Eastman Chemical vs. PPG Industries |
| Grupo Aeroportuario vs. Grupo Aeroportuario del | Grupo Aeroportuario vs. AerSale Corp | Grupo Aeroportuario vs. Flughafen Zrich AG | Grupo Aeroportuario vs. Grupo Aeroportuario del |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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