Correlation Between Gold Fields and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Gold Fields 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 Gold Fields and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields Ltd and Eastman Chemical, you can compare the effects of market volatilities on Gold Fields 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 Gold Fields with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Eastman Chemical.
Diversification Opportunities for Gold Fields and Eastman Chemical
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Eastman is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Gold Fields 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 Gold Fields Ltd 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 Gold Fields i.e., Gold Fields and Eastman Chemical go up and down completely randomly.
Pair Corralation between Gold Fields and Eastman Chemical
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Eastman Chemical. In addition to that, Gold Fields is 1.82 times more volatile than Eastman Chemical. It trades about -0.23 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Eastman Chemical
Performance |
| Timeline |
| Gold Fields |
| Eastman Chemical |
Gold Fields and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Eastman Chemical
The main advantage of trading using opposite Gold Fields and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields 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.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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