Correlation Between Linde Plc and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Linde Plc 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 Linde Plc and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linde plc Ordinary and Eastman Chemical, you can compare the effects of market volatilities on Linde Plc 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 Linde Plc with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde Plc and Eastman Chemical.
Diversification Opportunities for Linde Plc and Eastman Chemical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Linde and Eastman is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc Ordinary and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Linde Plc 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 Linde plc Ordinary 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 Linde Plc i.e., Linde Plc and Eastman Chemical go up and down completely randomly.
Pair Corralation between Linde Plc and Eastman Chemical
Considering the 90-day investment horizon Linde plc Ordinary is expected to under-perform the Eastman Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Linde plc Ordinary is 1.54 times less risky than Eastman Chemical. The stock trades about -0.19 of its potential returns per unit of risk. The Eastman Chemical is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 10,670 in Eastman Chemical on August 27, 2024 and sell it today you would lose (111.00) from holding Eastman Chemical or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linde plc Ordinary vs. Eastman Chemical
Performance |
| Timeline |
| Linde plc Ordinary |
| Eastman Chemical |
Linde Plc and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linde Plc and Eastman Chemical
The main advantage of trading using opposite Linde Plc and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde Plc 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.| Linde Plc vs. PPG Industries | Linde Plc vs. Ecolab Inc | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. LyondellBasell Industries NV |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |