Correlation Between FutureFuel Corp and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both FutureFuel Corp and Eastman Chemical 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 FutureFuel Corp and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FutureFuel Corp and Eastman Chemical, you can compare the effects of market volatilities on FutureFuel Corp and Eastman Chemical 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 FutureFuel Corp with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of FutureFuel Corp and Eastman Chemical.
Diversification Opportunities for FutureFuel Corp and Eastman Chemical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between FutureFuel and Eastman is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and FutureFuel Corp 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 FutureFuel Corp are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of FutureFuel Corp i.e., FutureFuel Corp and Eastman Chemical go up and down completely randomly.
Pair Corralation between FutureFuel Corp and Eastman Chemical
Allowing for the 90-day total investment horizon FutureFuel Corp is expected to under-perform the Eastman Chemical. In addition to that, FutureFuel Corp is 2.48 times more volatile than Eastman Chemical. It trades about -0.18 of its total potential returns per unit of risk. Eastman Chemical is currently generating about -0.01 per unit of volatility. If you would invest 10,670 in Eastman Chemical on August 28, 2024 and sell it today you would lose (86.00) from holding Eastman Chemical or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FutureFuel Corp vs. Eastman Chemical
Performance |
| Timeline |
| FutureFuel Corp |
| Eastman Chemical |
FutureFuel Corp and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FutureFuel Corp and Eastman Chemical
The main advantage of trading using opposite FutureFuel Corp and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureFuel Corp position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. H B Fuller | FutureFuel Corp vs. Northern Technologies | FutureFuel Corp vs. Cabot |
| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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