Correlation Between United Airlines and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both United Airlines 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 United Airlines and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Eastman Chemical, you can compare the effects of market volatilities on United Airlines 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 United Airlines with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Eastman Chemical.
Diversification Opportunities for United Airlines and Eastman Chemical
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Eastman is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and United Airlines 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 United Airlines Holdings 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 United Airlines i.e., United Airlines and Eastman Chemical go up and down completely randomly.
Pair Corralation between United Airlines and Eastman Chemical
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 2.3 times more return on investment than Eastman Chemical. However, United Airlines is 2.3 times more volatile than Eastman Chemical. It trades about 0.25 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.07 per unit of risk. If you would invest 9,384 in United Airlines Holdings on October 22, 2024 and sell it today you would earn a total of 1,126 from holding United Airlines Holdings or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
United Airlines Holdings vs. Eastman Chemical
Performance |
| Timeline |
| United Airlines Holdings |
| Eastman Chemical |
United Airlines and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Eastman Chemical
The main advantage of trading using opposite United Airlines and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines 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.| United Airlines vs. Delta Air Lines | United Airlines vs. Air China Limited | United Airlines vs. RYANAIR HLDGS ADR | United Airlines vs. Southwest Airlines Co |
| Eastman Chemical vs. PLAYMATES TOYS | Eastman Chemical vs. PPHE HOTEL GROUP | Eastman Chemical vs. Summit Hotel Properties | Eastman Chemical vs. MIRAMAR HOTEL INV |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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