Correlation Between Transport International and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Eastman Chemical, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Eastman Chemical.
Diversification Opportunities for Transport International and Eastman Chemical
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transport and Eastman is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and Eastman Chemical go up and down completely randomly.
Pair Corralation between Transport International and Eastman Chemical
Assuming the 90 days horizon Transport International Holdings is expected to generate 0.55 times more return on investment than Eastman Chemical. However, Transport International Holdings is 1.81 times less risky than Eastman Chemical. It trades about -0.09 of its potential returns per unit of risk. Eastman Chemical is currently generating about -0.16 per unit of risk. If you would invest 94.00 in Transport International Holdings on January 17, 2025 and sell it today you would lose (5.00) from holding Transport International Holdings or give up 5.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Eastman Chemical
Performance |
| Timeline |
| Transport International |
| Eastman Chemical |
Transport International and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Eastman Chemical
The main advantage of trading using opposite Transport International and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. DATALOGIC | Transport International vs. Fair Isaac Corp | Transport International vs. China Datang | Transport International vs. Norwegian Air Shuttle |
| Eastman Chemical vs. CITIC Telecom International | Eastman Chemical vs. Western Copper and | Eastman Chemical vs. Chengdu PUTIAN Telecommunications | Eastman Chemical vs. COMBA TELECOM SYST |
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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