Correlation Between Hormel Foods and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Hormel Foods 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 Hormel Foods and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Eastman Chemical, you can compare the effects of market volatilities on Hormel Foods 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 Hormel Foods with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Eastman Chemical.
Diversification Opportunities for Hormel Foods and Eastman Chemical
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hormel and Eastman is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Hormel Foods 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 Hormel Foods 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 Hormel Foods i.e., Hormel Foods and Eastman Chemical go up and down completely randomly.
Pair Corralation between Hormel Foods and Eastman Chemical
Assuming the 90 days trading horizon Hormel Foods is expected to under-perform the Eastman Chemical. In addition to that, Hormel Foods is 2.1 times more volatile than Eastman Chemical. It trades about -0.17 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.21 per unit of volatility. If you would invest 27,540 in Eastman Chemical on November 4, 2024 and sell it today you would earn a total of 860.00 from holding Eastman Chemical or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hormel Foods vs. Eastman Chemical
Performance |
| Timeline |
| Hormel Foods |
| Eastman Chemical |
Hormel Foods and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and Eastman Chemical
The main advantage of trading using opposite Hormel Foods and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods 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.| Hormel Foods vs. British American Tobacco | Hormel Foods vs. Nordon Indstrias Metalrgicas | Hormel Foods vs. Marfrig Global Foods | Hormel Foods vs. Burlington Stores, |
| Eastman Chemical vs. Taiwan Semiconductor Manufacturing | Eastman Chemical vs. ON Semiconductor | Eastman Chemical vs. Medical Properties Trust, | Eastman Chemical vs. Zoom Video Communications |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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