Correlation Between NI Holdings and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both NI Holdings 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 NI Holdings and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NI Holdings and Eastman Chemical, you can compare the effects of market volatilities on NI Holdings 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 NI Holdings with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NI Holdings and Eastman Chemical.
Diversification Opportunities for NI Holdings and Eastman Chemical
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NODK and Eastman is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and NI Holdings 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 NI 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 NI Holdings i.e., NI Holdings and Eastman Chemical go up and down completely randomly.
Pair Corralation between NI Holdings and Eastman Chemical
Given the investment horizon of 90 days NI Holdings is expected to generate 1.14 times less return on investment than Eastman Chemical. In addition to that, NI Holdings is 1.08 times more volatile than Eastman Chemical. It trades about 0.03 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.04 per unit of volatility. If you would invest 8,005 in Eastman Chemical on August 24, 2024 and sell it today you would earn a total of 2,554 from holding Eastman Chemical or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NI Holdings vs. Eastman Chemical
Performance |
| Timeline |
| NI Holdings |
| Eastman Chemical |
NI Holdings and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NI Holdings and Eastman Chemical
The main advantage of trading using opposite NI Holdings and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings 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.| NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
| Eastman Chemical vs. Eshallgo Class A | Eastman Chemical vs. Amtech Systems | Eastman Chemical vs. Gold Fields Ltd | Eastman Chemical vs. Aegean Airlines SA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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