Correlation Between Eastman Chemical and Givaudan
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Givaudan 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 Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Givaudan SA, you can compare the effects of market volatilities on Eastman Chemical and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Givaudan.
Diversification Opportunities for Eastman Chemical and Givaudan
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eastman and Givaudan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Givaudan go up and down completely randomly.
Pair Corralation between Eastman Chemical and Givaudan
Considering the 90-day investment horizon Eastman Chemical is expected to generate 1.67 times less return on investment than Givaudan. But when comparing it to its historical volatility, Eastman Chemical is 1.77 times less risky than Givaudan. It trades about 0.07 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 313,205 in Givaudan SA on September 1, 2024 and sell it today you would earn a total of 119,463 from holding Givaudan SA or generate 38.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 68.28% |
| Values | Daily Returns |
Eastman Chemical vs. Givaudan SA
Performance |
| Timeline |
| Eastman Chemical |
| Givaudan SA |
Eastman Chemical and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Givaudan
The main advantage of trading using opposite Eastman Chemical and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| Givaudan vs. Sherwin Williams Co | Givaudan vs. Air Liquide SA | Givaudan vs. LAir Liquide SA | Givaudan vs. Air Products and |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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