Correlation Between Eastman Chemical and Stagwell
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Stagwell 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 Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Stagwell, you can compare the effects of market volatilities on Eastman Chemical and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Stagwell.
Diversification Opportunities for Eastman Chemical and Stagwell
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastman and Stagwell is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Stagwell go up and down completely randomly.
Pair Corralation between Eastman Chemical and Stagwell
Considering the 90-day investment horizon Eastman Chemical is expected to generate 1.34 times less return on investment than Stagwell. But when comparing it to its historical volatility, Eastman Chemical is 2.2 times less risky than Stagwell. It trades about 0.04 of its potential returns per unit of risk. Stagwell is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 690.00 in Stagwell on August 30, 2024 and sell it today you would earn a total of 101.00 from holding Stagwell or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Stagwell
Performance |
| Timeline |
| Eastman Chemical |
| Stagwell |
Eastman Chemical and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Stagwell
The main advantage of trading using opposite Eastman Chemical and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.| Eastman Chemical vs. Direxion Daily FTSE | Eastman Chemical vs. Collegium Pharmaceutical | Eastman Chemical vs. KKR Co LP | Eastman Chemical vs. iShares Dividend and |
| Stagwell vs. Capital Income Builder | Stagwell vs. Direxion Daily FTSE | Stagwell vs. Dodge Global Stock | Stagwell vs. Collegium Pharmaceutical |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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