Correlation Between Kronos Worldwide and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Kronos Worldwide 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 Kronos Worldwide and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kronos Worldwide and Eastman Chemical, you can compare the effects of market volatilities on Kronos Worldwide 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 Kronos Worldwide with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kronos Worldwide and Eastman Chemical.
Diversification Opportunities for Kronos Worldwide and Eastman Chemical
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kronos and Eastman is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Worldwide and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide i.e., Kronos Worldwide and Eastman Chemical go up and down completely randomly.
Pair Corralation between Kronos Worldwide and Eastman Chemical
Considering the 90-day investment horizon Kronos Worldwide is expected to generate 1.5 times more return on investment than Eastman Chemical. However, Kronos Worldwide is 1.5 times more volatile than Eastman Chemical. It trades about -0.02 of its potential returns per unit of risk. Eastman Chemical is currently generating about -0.07 per unit of risk. If you would invest 1,201 in Kronos Worldwide on August 25, 2024 and sell it today you would lose (33.00) from holding Kronos Worldwide or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kronos Worldwide vs. Eastman Chemical
Performance |
| Timeline |
| Kronos Worldwide |
| Eastman Chemical |
Kronos Worldwide and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kronos Worldwide and Eastman Chemical
The main advantage of trading using opposite Kronos Worldwide and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kronos Worldwide 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.| Kronos Worldwide vs. Oil Dri | Kronos Worldwide vs. Quaker Chemical | Kronos Worldwide vs. Ecovyst | Kronos Worldwide vs. Minerals Technologies |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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