Correlation Between Eastman Chemical and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and BBB Foods, you can compare the effects of market volatilities on Eastman Chemical and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and BBB Foods.
Diversification Opportunities for Eastman Chemical and BBB Foods
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastman and BBB is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and BBB Foods go up and down completely randomly.
Pair Corralation between Eastman Chemical and BBB Foods
Considering the 90-day investment horizon Eastman Chemical is expected to generate 0.52 times more return on investment than BBB Foods. However, Eastman Chemical is 1.93 times less risky than BBB Foods. It trades about -0.01 of its potential returns per unit of risk. BBB Foods is currently generating about -0.13 per unit of risk. If you would invest 10,484 in Eastman Chemical on August 30, 2024 and sell it today you would lose (61.00) from holding Eastman Chemical or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Eastman Chemical vs. BBB Foods
Performance |
| Timeline |
| Eastman Chemical |
| BBB Foods |
Eastman Chemical and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and BBB Foods
The main advantage of trading using opposite Eastman Chemical and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| BBB Foods vs. Maiden Holdings | BBB Foods vs. Assurant | BBB Foods vs. Yum Brands | BBB Foods vs. Westrock Coffee |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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