Correlation Between Supermarket Income and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Supermarket Income 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 Supermarket Income and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supermarket Income REIT and Eastman Chemical Co, you can compare the effects of market volatilities on Supermarket Income 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 Supermarket Income with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Eastman Chemical.
Diversification Opportunities for Supermarket Income and Eastman Chemical
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Supermarket and Eastman is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Supermarket Income 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 Supermarket Income REIT 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 Supermarket Income i.e., Supermarket Income and Eastman Chemical go up and down completely randomly.
Pair Corralation between Supermarket Income and Eastman Chemical
Assuming the 90 days trading horizon Supermarket Income REIT is expected to generate 0.67 times more return on investment than Eastman Chemical. However, Supermarket Income REIT is 1.49 times less risky than Eastman Chemical. It trades about 0.03 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about -0.11 per unit of risk. If you would invest 6,910 in Supermarket Income REIT on September 12, 2024 and sell it today you would earn a total of 30.00 from holding Supermarket Income REIT or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Supermarket Income REIT vs. Eastman Chemical Co
Performance |
| Timeline |
| Supermarket Income REIT |
| Eastman Chemical |
Supermarket Income and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and Eastman Chemical
The main advantage of trading using opposite Supermarket Income and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income 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.| Supermarket Income vs. Hammerson PLC | Supermarket Income vs. Neometals | Supermarket Income vs. Coor Service Management | Supermarket Income vs. Fidelity Sustainable USD |
| Eastman Chemical vs. LPKF Laser Electronics | Eastman Chemical vs. Zegona Communications Plc | Eastman Chemical vs. Baker Steel Resources | Eastman Chemical vs. Orient Telecoms |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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