Correlation Between Bankers Investment and Eastman Chemical

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

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

Diversification Opportunities for Bankers Investment and Eastman Chemical

0.17

Correlation Coefficient

Bankers Investment  Eastman Chemical

Average diversification

The 3 months correlation between Bankers and Eastman is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment 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 Bankers Investment 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 Bankers Investment 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 Bankers Investment i.e., Bankers Investment and Eastman Chemical go up and down completely randomly.

Pair Corralation between Bankers Investment and Eastman Chemical

Assuming the 90 days trading horizon Bankers Investment Trust is expected to generate 0.54 times more return on investment than Eastman Chemical. However, Bankers Investment Trust is 1.86 times less risky than Eastman Chemical. It trades about 0.07 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about -0.04 per unit of risk. If you would invest  11,659  in Bankers Investment Trust on December 1, 2024 and sell it today you would earn a total of  461.00  from holding Bankers Investment Trust or generate 3.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Bankers Investment Trust  vs.  Eastman Chemical Co

Bankers Investment Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bankers Investment Trust are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Bankers Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Eastman Chemical

Risk-Adjusted Performance

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 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 Bankers Investment and Eastman Chemical

The main advantage of trading using opposite Bankers Investment and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankers Investment 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 Bankers Investment 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..