Correlation Between Zalando SE and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Zalando SE 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 Zalando SE and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zalando SE and Eastman Chemical, you can compare the effects of market volatilities on Zalando SE 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 Zalando SE with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zalando SE and Eastman Chemical.
Diversification Opportunities for Zalando SE and Eastman Chemical
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Zalando and Eastman is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Zalando SE and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Zalando SE 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 Zalando SE 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 Zalando SE i.e., Zalando SE and Eastman Chemical go up and down completely randomly.
Pair Corralation between Zalando SE and Eastman Chemical
Assuming the 90 days horizon Zalando SE is expected to generate 3.68 times less return on investment than Eastman Chemical. In addition to that, Zalando SE is 1.77 times more volatile than Eastman Chemical. It trades about 0.01 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.05 per unit of volatility. If you would invest 7,436 in Eastman Chemical on August 30, 2024 and sell it today you would earn a total of 2,654 from holding Eastman Chemical or generate 35.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zalando SE vs. Eastman Chemical
Performance |
| Timeline |
| Zalando SE |
| Eastman Chemical |
Zalando SE and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zalando SE and Eastman Chemical
The main advantage of trading using opposite Zalando SE and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zalando SE 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.| Zalando SE vs. ALTAIR RES INC | Zalando SE vs. RYU Apparel | Zalando SE vs. MYFAIR GOLD P | Zalando SE vs. HF SINCLAIR P |
| Eastman Chemical vs. Air Liquide SA | Eastman Chemical vs. Air Products and | Eastman Chemical vs. Shin Etsu Chemical Co | Eastman Chemical vs. BASF SE |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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