Correlation Between NIPPON STEEL and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both NIPPON STEEL 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 NIPPON STEEL and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON STEEL SPADR and Eastman Chemical, you can compare the effects of market volatilities on NIPPON STEEL 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 NIPPON STEEL with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON STEEL and Eastman Chemical.
Diversification Opportunities for NIPPON STEEL and Eastman Chemical
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NIPPON and Eastman is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON STEEL SPADR and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and NIPPON STEEL 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 NIPPON STEEL SPADR 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 NIPPON STEEL i.e., NIPPON STEEL and Eastman Chemical go up and down completely randomly.
Pair Corralation between NIPPON STEEL and Eastman Chemical
Assuming the 90 days trading horizon NIPPON STEEL SPADR is expected to under-perform the Eastman Chemical. In addition to that, NIPPON STEEL is 1.69 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 0.02 per unit of volatility. If you would invest 8,824 in Eastman Chemical on September 20, 2024 and sell it today you would earn a total of 294.00 from holding Eastman Chemical or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIPPON STEEL SPADR vs. Eastman Chemical
Performance |
| Timeline |
| NIPPON STEEL SPADR |
| Eastman Chemical |
NIPPON STEEL and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON STEEL and Eastman Chemical
The main advantage of trading using opposite NIPPON STEEL and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON STEEL 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.| NIPPON STEEL vs. Scientific Games | NIPPON STEEL vs. Ryanair Holdings plc | NIPPON STEEL vs. OURGAME INTHOLDL 00005 | NIPPON STEEL vs. NORWEGIAN AIR SHUT |
| Eastman Chemical vs. AIR LIQUIDE ADR | Eastman Chemical vs. Ganfeng Lithium Co | Eastman Chemical vs. Superior Plus Corp | Eastman Chemical vs. SIVERS SEMICONDUCTORS AB |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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