Correlation Between Eastman Chemical and Ashland Global
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Ashland Global 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 Eastman Chemical and Ashland Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Ashland Global Holdings, you can compare the effects of market volatilities on Eastman Chemical and Ashland Global 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 Eastman Chemical with a short position of Ashland Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Ashland Global.
Diversification Opportunities for Eastman Chemical and Ashland Global
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastman and Ashland is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Ashland Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashland Global Holdings and Eastman Chemical 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 Eastman Chemical are associated (or correlated) with Ashland Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashland Global Holdings has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Ashland Global go up and down completely randomly.
Pair Corralation between Eastman Chemical and Ashland Global
Considering the 90-day investment horizon Eastman Chemical is expected to generate 1.11 times more return on investment than Ashland Global. However, Eastman Chemical is 1.11 times more volatile than Ashland Global Holdings. It trades about 0.01 of its potential returns per unit of risk. Ashland Global Holdings is currently generating about 0.01 per unit of risk. If you would invest 9,839 in Eastman Chemical on January 26, 2024 and sell it today you would lose (203.00) from holding Eastman Chemical or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Ashland Global Holdings
Performance |
| Timeline |
| Eastman Chemical |
| Ashland Global Holdings |
Eastman Chemical and Ashland Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Ashland Global
The main advantage of trading using opposite Eastman Chemical and Ashland Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Ashland Global 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 Ashland Global will offset losses from the drop in Ashland Global's long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| Ashland Global vs. Air Products and | Ashland Global vs. Linde plc Ordinary | Ashland Global vs. LyondellBasell Industries NV | Ashland Global vs. Eastman Chemical |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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