Correlation Between Postal Realty and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Postal Realty 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 Postal Realty and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Realty Trust and Eastman Chemical, you can compare the effects of market volatilities on Postal Realty 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 Postal Realty with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Realty and Eastman Chemical.
Diversification Opportunities for Postal Realty and Eastman Chemical
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Postal and Eastman is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Postal Realty Trust and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Postal Realty 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 Postal Realty Trust 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 Postal Realty i.e., Postal Realty and Eastman Chemical go up and down completely randomly.
Pair Corralation between Postal Realty and Eastman Chemical
Given the investment horizon of 90 days Postal Realty Trust is expected to under-perform the Eastman Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Postal Realty Trust is 1.53 times less risky than Eastman Chemical. The stock trades about -0.21 of its potential returns per unit of risk. The Eastman Chemical is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 10,237 in Eastman Chemical on September 12, 2024 and sell it today you would lose (304.00) from holding Eastman Chemical or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postal Realty Trust vs. Eastman Chemical
Performance |
| Timeline |
| Postal Realty Trust |
| Eastman Chemical |
Postal Realty and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Realty and Eastman Chemical
The main advantage of trading using opposite Postal Realty and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Realty 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.| Postal Realty vs. Office Properties Income | Postal Realty vs. Boston Properties | Postal Realty vs. SL Green Realty | Postal Realty vs. Alexandria Real Estate |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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