Correlation Between Eastman Chemical and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and National CineMedia 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 National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and National CineMedia, you can compare the effects of market volatilities on Eastman Chemical and National CineMedia 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 National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and National CineMedia.
Diversification Opportunities for Eastman Chemical and National CineMedia
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastman and National is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and National CineMedia go up and down completely randomly.
Pair Corralation between Eastman Chemical and National CineMedia
Considering the 90-day investment horizon Eastman Chemical is expected to generate 4.74 times less return on investment than National CineMedia. But when comparing it to its historical volatility, Eastman Chemical is 2.04 times less risky than National CineMedia. It trades about 0.04 of its potential returns per unit of risk. National CineMedia is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 483.00 in National CineMedia on September 3, 2024 and sell it today you would earn a total of 212.00 from holding National CineMedia or generate 43.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. National CineMedia
Performance |
| Timeline |
| Eastman Chemical |
| National CineMedia |
Eastman Chemical and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and National CineMedia
The main advantage of trading using opposite Eastman Chemical and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia's long position.| Eastman Chemical vs. SPACE | Eastman Chemical vs. Bayview Acquisition Corp | Eastman Chemical vs. T Rowe Price | Eastman Chemical vs. Ampleforth |
| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Glory Star New | National CineMedia vs. Impact Fusion International |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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