Correlation Between Link Real and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Link Real 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 Link Real and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Real Estate and Eastman Chemical, you can compare the effects of market volatilities on Link Real 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 Link Real with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Real and Eastman Chemical.
Diversification Opportunities for Link Real and Eastman Chemical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Link and Eastman is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Link Real Estate and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Link Real 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 Link Real Estate 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 Link Real i.e., Link Real and Eastman Chemical go up and down completely randomly.
Pair Corralation between Link Real and Eastman Chemical
Assuming the 90 days horizon Link Real Estate is expected to under-perform the Eastman Chemical. In addition to that, Link Real is 2.15 times more volatile than Eastman Chemical. It trades about -0.01 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.07 per unit of volatility. If you would invest 8,668 in Eastman Chemical on September 3, 2024 and sell it today you would earn a total of 1,804 from holding Eastman Chemical or generate 20.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.46% |
| Values | Daily Returns |
Link Real Estate vs. Eastman Chemical
Performance |
| Timeline |
| Link Real Estate |
| Eastman Chemical |
Link Real and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Link Real and Eastman Chemical
The main advantage of trading using opposite Link Real and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Real 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.| Link Real vs. Kimco Realty | Link Real vs. Simon Property Group | Link Real vs. Saul Centers | Link Real vs. Kimco Realty |
| Eastman Chemical vs. SPACE | Eastman Chemical vs. Bayview Acquisition Corp | Eastman Chemical vs. T Rowe Price | Eastman Chemical vs. Ampleforth |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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