Correlation Between UPDATE SOFTWARE and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both UPDATE SOFTWARE 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 UPDATE SOFTWARE and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UPDATE SOFTWARE and Eastman Chemical, you can compare the effects of market volatilities on UPDATE SOFTWARE 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 UPDATE SOFTWARE with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPDATE SOFTWARE and Eastman Chemical.
Diversification Opportunities for UPDATE SOFTWARE and Eastman Chemical
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UPDATE and Eastman is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding UPDATE SOFTWARE and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and UPDATE SOFTWARE 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 UPDATE SOFTWARE 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 UPDATE SOFTWARE i.e., UPDATE SOFTWARE and Eastman Chemical go up and down completely randomly.
Pair Corralation between UPDATE SOFTWARE and Eastman Chemical
Assuming the 90 days trading horizon UPDATE SOFTWARE is expected to generate 1.21 times more return on investment than Eastman Chemical. However, UPDATE SOFTWARE is 1.21 times more volatile than Eastman Chemical. It trades about -0.26 of its potential returns per unit of risk. Eastman Chemical is currently generating about -0.47 per unit of risk. If you would invest 1,617 in UPDATE SOFTWARE on October 14, 2024 and sell it today you would lose (105.00) from holding UPDATE SOFTWARE or give up 6.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPDATE SOFTWARE vs. Eastman Chemical
Performance |
| Timeline |
| UPDATE SOFTWARE |
| Eastman Chemical |
UPDATE SOFTWARE and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPDATE SOFTWARE and Eastman Chemical
The main advantage of trading using opposite UPDATE SOFTWARE and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPDATE SOFTWARE 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.| UPDATE SOFTWARE vs. CHRYSALIS INVESTMENTS LTD | UPDATE SOFTWARE vs. IDP EDUCATION LTD | UPDATE SOFTWARE vs. Japan Asia Investment | UPDATE SOFTWARE vs. Lendlease Group |
| Eastman Chemical vs. MACOM Technology Solutions | Eastman Chemical vs. AECOM TECHNOLOGY | Eastman Chemical vs. SMA Solar Technology | Eastman Chemical vs. UPDATE SOFTWARE |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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