Correlation Between Eastman Chemical and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Canlan Ice 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 Canlan Ice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Canlan Ice Sports, you can compare the effects of market volatilities on Eastman Chemical and Canlan Ice 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 Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Canlan Ice.
Diversification Opportunities for Eastman Chemical and Canlan Ice
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eastman and Canlan is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports 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 Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Canlan Ice go up and down completely randomly.
Pair Corralation between Eastman Chemical and Canlan Ice
Considering the 90-day investment horizon Eastman Chemical is expected to generate 15.18 times more return on investment than Canlan Ice. However, Eastman Chemical is 15.18 times more volatile than Canlan Ice Sports. It trades about 0.04 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.13 per unit of risk. If you would invest 8,193 in Eastman Chemical on September 3, 2024 and sell it today you would earn a total of 2,279 from holding Eastman Chemical or generate 27.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Canlan Ice Sports
Performance |
| Timeline |
| Eastman Chemical |
| Canlan Ice Sports |
Eastman Chemical and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Canlan Ice
The main advantage of trading using opposite Eastman Chemical and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.| Eastman Chemical vs. SPACE | Eastman Chemical vs. Bayview Acquisition Corp | Eastman Chemical vs. T Rowe Price | Eastman Chemical vs. Ampleforth |
| Canlan Ice vs. Weibo Corp | Canlan Ice vs. WiMi Hologram Cloud | Canlan Ice vs. 51Talk Online Education | Canlan Ice vs. Relx PLC ADR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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