Correlation Between Caladrius Biosciences and Eastman Chemical

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

By analyzing existing cross correlation between Caladrius Biosciences and Eastman Chemical, you can compare the effects of market volatilities on Caladrius Biosciences 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 Caladrius Biosciences with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caladrius Biosciences and Eastman Chemical.

Diversification Opportunities for Caladrius Biosciences and Eastman Chemical

0.49

Correlation Coefficient

Caladrius Biosciences  Eastman Chemical

Very weak diversification

The 24 months correlation between Caladrius and Eastman is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Caladrius Biosciences and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Caladrius Biosciences 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 Caladrius Biosciences 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 Caladrius Biosciences i.e., Caladrius Biosciences and Eastman Chemical go up and down completely randomly.

Pair Corralation between Caladrius Biosciences and Eastman Chemical

If you would invest  9,706  in Eastman Chemical on February 22, 2024 and sell it today you would earn a total of  289.00  from holding Eastman Chemical or generate 2.98% return on investment over 90 days.

Time Period	24 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Caladrius Biosciences  vs.  Eastman Chemical

Caladrius Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caladrius Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Eastman Chemical

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Eastman Chemical is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Caladrius Biosciences and Eastman Chemical

The main advantage of trading using opposite Caladrius Biosciences and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caladrius Biosciences 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.

The idea behind Caladrius Biosciences and Eastman Chemical 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.