Correlation Between Eastman Chemical and Catalyst/princeton

Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Catalyst/princeton 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 Catalyst/princeton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastman Chemical and Catalystprinceton Floating Rate, you can compare the effects of market volatilities on Eastman Chemical and Catalyst/princeton 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 Catalyst/princeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Catalyst/princeton.

Diversification Opportunities for Eastman Chemical and Catalyst/princeton

0.62

Correlation Coefficient

Eastman Chemical  Catalyst/princeton

Poor diversification

The 3 months correlation between Eastman and Catalyst/princeton is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Catalystprinceton Floating Rat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst/princeton 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 Catalyst/princeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst/princeton has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Catalyst/princeton go up and down completely randomly.

Pair Corralation between Eastman Chemical and Catalyst/princeton

Considering the 90-day investment horizon Eastman Chemical is expected to generate 101.0 times less return on investment than Catalyst/princeton. In addition to that, Eastman Chemical is 6.57 times more volatile than Catalystprinceton Floating Rate. It trades about 0.0 of its total potential returns per unit of risk. Catalystprinceton Floating Rate is currently generating about 0.25 per unit of volatility. If you would invest  915.00  in Catalystprinceton Floating Rate on February 23, 2024 and sell it today you would earn a total of  16.00  from holding Catalystprinceton Floating Rate or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eastman Chemical  vs.  Catalystprinceton Floating Rat

Eastman Chemical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Chemical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Eastman Chemical displayed solid returns over the last few months and may actually be approaching a breakup point.

Catalyst/princeton

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystprinceton Floating Rate are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalyst/princeton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eastman Chemical and Catalyst/princeton

The main advantage of trading using opposite Eastman Chemical and Catalyst/princeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Catalyst/princeton 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 Catalyst/princeton will offset losses from the drop in Catalyst/princeton's long position.

The idea behind Eastman Chemical and Catalystprinceton Floating Rate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.