Correlation Between Impax Environmental and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Impax Environmental 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 Impax Environmental and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impax Environmental Markets and Eastman Chemical Co, you can compare the effects of market volatilities on Impax Environmental 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 Impax Environmental with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impax Environmental and Eastman Chemical.
Diversification Opportunities for Impax Environmental and Eastman Chemical
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Impax and Eastman is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Impax Environmental Markets and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Impax Environmental 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 Impax Environmental Markets 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 Impax Environmental i.e., Impax Environmental and Eastman Chemical go up and down completely randomly.
Pair Corralation between Impax Environmental and Eastman Chemical
Assuming the 90 days trading horizon Impax Environmental Markets is expected to under-perform the Eastman Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Impax Environmental Markets is 1.67 times less risky than Eastman Chemical. The stock trades about -0.14 of its potential returns per unit of risk. The Eastman Chemical Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 10,098 in Eastman Chemical Co on September 14, 2024 and sell it today you would lose (85.00) from holding Eastman Chemical Co or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Impax Environmental Markets vs. Eastman Chemical Co
Performance |
| Timeline |
| Impax Environmental |
| Eastman Chemical |
Impax Environmental and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impax Environmental and Eastman Chemical
The main advantage of trading using opposite Impax Environmental and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Environmental 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.| Impax Environmental vs. Trainline Plc | Impax Environmental vs. Vitec Software Group | Impax Environmental vs. EVS Broadcast Equipment | Impax Environmental vs. Iron Mountain |
| Eastman Chemical vs. Ebro Foods | Eastman Chemical vs. Impax Environmental Markets | Eastman Chemical vs. Grieg Seafood | Eastman Chemical vs. Roebuck Food Group |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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