Correlation Between Medical Properties and Eastman Chemical

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

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

Diversification Opportunities for Medical Properties and Eastman Chemical

0.43

Correlation Coefficient

Medical Properties  Eastman Chemical

Very weak diversification

The 3 months correlation between Medical and Eastman is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Medical Properties 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 Medical Properties Trust 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 Medical Properties i.e., Medical Properties and Eastman Chemical go up and down completely randomly.

Pair Corralation between Medical Properties and Eastman Chemical

Assuming the 90 days trading horizon Medical Properties is expected to generate 1.4 times less return on investment than Eastman Chemical. In addition to that, Medical Properties is 3.11 times more volatile than Eastman Chemical Co. It trades about 0.01 of its total potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.05 per unit of volatility. If you would invest  8,577  in Eastman Chemical Co on September 12, 2024 and sell it today you would earn a total of  1,365  from holding Eastman Chemical Co or generate 15.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.39%
Values	Daily Returns

Medical Properties Trust  vs.  Eastman Chemical Co

Medical Properties Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Eastman Chemical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Chemical Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eastman Chemical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Medical Properties and Eastman Chemical

The main advantage of trading using opposite Medical Properties and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties 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 Medical Properties Trust and Eastman Chemical Co 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.