Correlation Between Wheaton Precious and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious 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 Wheaton Precious and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and Eastman Chemical Co, you can compare the effects of market volatilities on Wheaton Precious 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 Wheaton Precious with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Eastman Chemical.
Diversification Opportunities for Wheaton Precious and Eastman Chemical
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wheaton and Eastman is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Eastman Chemical go up and down completely randomly.
Pair Corralation between Wheaton Precious and Eastman Chemical
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.49 times more return on investment than Eastman Chemical. However, Wheaton Precious is 1.49 times more volatile than Eastman Chemical Co. It trades about 0.04 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.02 per unit of risk. If you would invest 348,301 in Wheaton Precious Metals on October 25, 2024 and sell it today you would earn a total of 129,199 from holding Wheaton Precious Metals or generate 37.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.98% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Eastman Chemical Co
Performance |
| Timeline |
| Wheaton Precious Metals |
| Eastman Chemical |
Wheaton Precious and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Eastman Chemical
The main advantage of trading using opposite Wheaton Precious and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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.| Wheaton Precious vs. Beowulf Mining | Wheaton Precious vs. Gaztransport et Technigaz | Wheaton Precious vs. GreenX Metals | Wheaton Precious vs. First Class Metals |
| Eastman Chemical vs. Central Asia Metals | Eastman Chemical vs. Taiwan Semiconductor Manufacturing | Eastman Chemical vs. Odfjell Drilling | Eastman Chemical vs. AMG Advanced Metallurgical |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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