Correlation Between Eastman Chemical and Hawkins
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Hawkins 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 Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Hawkins, you can compare the effects of market volatilities on Eastman Chemical and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Hawkins.
Diversification Opportunities for Eastman Chemical and Hawkins
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastman and Hawkins is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Hawkins go up and down completely randomly.
Pair Corralation between Eastman Chemical and Hawkins
Considering the 90-day investment horizon Eastman Chemical is expected to generate 3.83 times less return on investment than Hawkins. But when comparing it to its historical volatility, Eastman Chemical is 1.55 times less risky than Hawkins. It trades about 0.04 of its potential returns per unit of risk. Hawkins is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,997 in Hawkins on November 19, 2024 and sell it today you would earn a total of 7,042 from holding Hawkins or generate 176.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Hawkins
Performance |
| Timeline |
| Eastman Chemical |
| Hawkins |
Eastman Chemical and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Hawkins
The main advantage of trading using opposite Eastman Chemical and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' 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 |
| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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