Correlation Between Eastman Chemical and Origin Materials
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Origin Materials 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 Origin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Origin Materials, you can compare the effects of market volatilities on Eastman Chemical and Origin Materials 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 Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Origin Materials.
Diversification Opportunities for Eastman Chemical and Origin Materials
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eastman and Origin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials 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 Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Origin Materials go up and down completely randomly.
Pair Corralation between Eastman Chemical and Origin Materials
Considering the 90-day investment horizon Eastman Chemical is expected to generate 0.2 times more return on investment than Origin Materials. However, Eastman Chemical is 5.03 times less risky than Origin Materials. It trades about 0.06 of its potential returns per unit of risk. Origin Materials is currently generating about 0.0 per unit of risk. If you would invest 7,792 in Eastman Chemical on August 27, 2024 and sell it today you would earn a total of 2,767 from holding Eastman Chemical or generate 35.51% 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. Origin Materials
Performance |
| Timeline |
| Eastman Chemical |
| Origin Materials |
Eastman Chemical and Origin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Origin Materials
The main advantage of trading using opposite Eastman Chemical and Origin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Origin Materials 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 Origin Materials will offset losses from the drop in Origin Materials' long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |