Correlation Between Northstar Clean and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Northstar Clean 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 Northstar Clean and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northstar Clean Technologies and Eastman Chemical, you can compare the effects of market volatilities on Northstar Clean 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 Northstar Clean with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and Eastman Chemical.
Diversification Opportunities for Northstar Clean and Eastman Chemical
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northstar and Eastman is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Northstar Clean 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 Northstar Clean Technologies 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 Northstar Clean i.e., Northstar Clean and Eastman Chemical go up and down completely randomly.
Pair Corralation between Northstar Clean and Eastman Chemical
Assuming the 90 days horizon Northstar Clean Technologies is expected to generate 2.54 times more return on investment than Eastman Chemical. However, Northstar Clean is 2.54 times more volatile than Eastman Chemical. It trades about 0.08 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.13 per unit of risk. If you would invest 20.00 in Northstar Clean Technologies on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Northstar Clean Technologies or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northstar Clean Technologies vs. Eastman Chemical
Performance |
| Timeline |
| Northstar Clean Tech |
| Eastman Chemical |
Northstar Clean and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northstar Clean and Eastman Chemical
The main advantage of trading using opposite Northstar Clean and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean 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.| Northstar Clean vs. Susglobal Energy Corp | Northstar Clean vs. LanzaTech Global | Northstar Clean vs. Aqua Metals | Northstar Clean vs. LiCycle Holdings Corp |
| Eastman Chemical vs. Air Products and | Eastman Chemical vs. International Flavors Fragrances | Eastman Chemical vs. Sherwin Williams Co | Eastman Chemical vs. PPG Industries |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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