Correlation Between Eastman Chemical and CVR Partners
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and CVR Partners 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 CVR Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and CVR Partners LP, you can compare the effects of market volatilities on Eastman Chemical and CVR Partners 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 CVR Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and CVR Partners.
Diversification Opportunities for Eastman Chemical and CVR Partners
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastman and CVR is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and CVR Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Partners LP 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 CVR Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Partners LP has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and CVR Partners go up and down completely randomly.
Pair Corralation between Eastman Chemical and CVR Partners
Considering the 90-day investment horizon Eastman Chemical is expected to under-perform the CVR Partners. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical is 1.63 times less risky than CVR Partners. The stock trades about -0.01 of its potential returns per unit of risk. The CVR Partners LP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6,896 in CVR Partners LP on August 30, 2024 and sell it today you would earn a total of 681.00 from holding CVR Partners LP or generate 9.88% 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. CVR Partners LP
Performance |
| Timeline |
| Eastman Chemical |
| CVR Partners LP |
Eastman Chemical and CVR Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and CVR Partners
The main advantage of trading using opposite Eastman Chemical and CVR Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, CVR Partners 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 CVR Partners will offset losses from the drop in CVR Partners' long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| CVR Partners vs. CF Industries Holdings | CVR Partners vs. The Mosaic | CVR Partners vs. American Vanguard | CVR Partners vs. ICL Israel Chemicals |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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