Correlation Between Stagwell and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Stagwell 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 Stagwell and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and Eastman Chemical, you can compare the effects of market volatilities on Stagwell 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 Stagwell with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Eastman Chemical.
Diversification Opportunities for Stagwell and Eastman Chemical
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stagwell and Eastman is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Stagwell 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 Stagwell 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 Stagwell i.e., Stagwell and Eastman Chemical go up and down completely randomly.
Pair Corralation between Stagwell and Eastman Chemical
Given the investment horizon of 90 days Stagwell is expected to generate 2.2 times more return on investment than Eastman Chemical. However, Stagwell is 2.2 times more volatile than Eastman Chemical. It trades about 0.03 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.04 per unit of risk. If you would invest 690.00 in Stagwell on August 30, 2024 and sell it today you would earn a total of 101.00 from holding Stagwell or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stagwell vs. Eastman Chemical
Performance |
| Timeline |
| Stagwell |
| Eastman Chemical |
Stagwell and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stagwell and Eastman Chemical
The main advantage of trading using opposite Stagwell and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell 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.| Stagwell vs. Capital Income Builder | Stagwell vs. Direxion Daily FTSE | Stagwell vs. Dodge Global Stock | Stagwell vs. Collegium Pharmaceutical |
| Eastman Chemical vs. Direxion Daily FTSE | Eastman Chemical vs. Collegium Pharmaceutical | Eastman Chemical vs. KKR Co LP | Eastman Chemical vs. iShares Dividend and |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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