Correlation Between Eastman Chemical and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Morgan Stanley 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 Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Morgan Stanley Direct, you can compare the effects of market volatilities on Eastman Chemical and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Morgan Stanley.
Diversification Opportunities for Eastman Chemical and Morgan Stanley
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eastman and Morgan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Morgan Stanley Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Direct 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Direct has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Morgan Stanley go up and down completely randomly.
Pair Corralation between Eastman Chemical and Morgan Stanley
Considering the 90-day investment horizon Eastman Chemical is expected to generate 1.62 times less return on investment than Morgan Stanley. But when comparing it to its historical volatility, Eastman Chemical is 1.15 times less risky than Morgan Stanley. It trades about 0.02 of its potential returns per unit of risk. Morgan Stanley Direct is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,907 in Morgan Stanley Direct on September 25, 2024 and sell it today you would earn a total of 177.00 from holding Morgan Stanley Direct or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.55% |
| Values | Daily Returns |
Eastman Chemical vs. Morgan Stanley Direct
Performance |
| Timeline |
| Eastman Chemical |
| Morgan Stanley Direct |
Eastman Chemical and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Morgan Stanley
The main advantage of trading using opposite Eastman Chemical and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| Morgan Stanley vs. Avient Corp | Morgan Stanley vs. Eastman Chemical | Morgan Stanley vs. NL Industries | Morgan Stanley vs. Molson Coors Brewing |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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