Correlation Between Fevertree Drinks and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Eastman Chemical, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Eastman Chemical.
Diversification Opportunities for Fevertree Drinks and Eastman Chemical
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fevertree and Eastman is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Fevertree Drinks 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 Fevertree Drinks Plc 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 Fevertree Drinks i.e., Fevertree Drinks and Eastman Chemical go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Eastman Chemical
Assuming the 90 days horizon Fevertree Drinks Plc is expected to under-perform the Eastman Chemical. In addition to that, Fevertree Drinks is 1.81 times more volatile than Eastman Chemical. It trades about -0.07 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.04 per unit of volatility. If you would invest 8,664 in Eastman Chemical on September 14, 2024 and sell it today you would earn a total of 1,162 from holding Eastman Chemical or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.12% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Eastman Chemical
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Eastman Chemical |
Fevertree Drinks and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Eastman Chemical
The main advantage of trading using opposite Fevertree Drinks and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. National Beverage Corp | Fevertree Drinks vs. Celsius Holdings | Fevertree Drinks vs. Monster Beverage Corp | Fevertree Drinks vs. Coca Cola Femsa SAB |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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