Correlation Between Eastman Chemical and Sea
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Sea 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 Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Sea, you can compare the effects of market volatilities on Eastman Chemical and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Sea.
Diversification Opportunities for Eastman Chemical and Sea
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eastman and Sea is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Sea go up and down completely randomly.
Pair Corralation between Eastman Chemical and Sea
Considering the 90-day investment horizon Eastman Chemical is expected to under-perform the Sea. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical is 1.78 times less risky than Sea. The stock trades about -0.06 of its potential returns per unit of risk. The Sea is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 9,395 in Sea on August 26, 2024 and sell it today you would earn a total of 1,909 from holding Sea or generate 20.32% 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. Sea
Performance |
| Timeline |
| Eastman Chemical |
| Sea |
Eastman Chemical and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Sea
The main advantage of trading using opposite Eastman Chemical and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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