Correlation Between Eastman Chemical and Intuitive Investments

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

By analyzing existing cross correlation between Eastman Chemical Co and Intuitive Investments Group, you can compare the effects of market volatilities on Eastman Chemical and Intuitive Investments 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 Intuitive Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Intuitive Investments.

Diversification Opportunities for Eastman Chemical and Intuitive Investments

0.71

Correlation Coefficient

Eastman Chemical  Intuitive Investments

Poor diversification

The 3 months correlation between Eastman and Intuitive is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and Intuitive Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Investments 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 Co are associated (or correlated) with Intuitive Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Investments has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Intuitive Investments go up and down completely randomly.

Pair Corralation between Eastman Chemical and Intuitive Investments

Assuming the 90 days trading horizon Eastman Chemical Co is expected to under-perform the Intuitive Investments. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical Co is 1.87 times less risky than Intuitive Investments. The stock trades about -0.24 of its potential returns per unit of risk. The Intuitive Investments Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  13,400  in Intuitive Investments Group on October 8, 2024 and sell it today you would lose (600.00) from holding Intuitive Investments Group or give up 4.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Eastman Chemical Co  vs.  Intuitive Investments Group

Eastman Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastman Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Intuitive Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intuitive Investments Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Intuitive Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eastman Chemical and Intuitive Investments

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

The idea behind Eastman Chemical Co and Intuitive Investments Group 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.