Correlation Between CAP LEASE and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both CAP LEASE 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 CAP LEASE and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAP LEASE AVIATION and Eastman Chemical Co, you can compare the effects of market volatilities on CAP LEASE 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 CAP LEASE with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP LEASE and Eastman Chemical.
Diversification Opportunities for CAP LEASE and Eastman Chemical
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CAP and Eastman is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and CAP LEASE 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 CAP LEASE AVIATION 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 CAP LEASE i.e., CAP LEASE and Eastman Chemical go up and down completely randomly.
Pair Corralation between CAP LEASE and Eastman Chemical
Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the Eastman Chemical. In addition to that, CAP LEASE is 1.5 times more volatile than Eastman Chemical Co. It trades about -0.02 of its total potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.09 per unit of volatility. If you would invest 6,632 in Eastman Chemical Co on September 19, 2024 and sell it today you would earn a total of 2,705 from holding Eastman Chemical Co or generate 40.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 94.88% |
Values | Daily Returns |
CAP LEASE AVIATION vs. Eastman Chemical Co
Performance |
Timeline |
CAP LEASE AVIATION |
Eastman Chemical |
CAP LEASE and Eastman Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CAP LEASE and Eastman Chemical
The main advantage of trading using opposite CAP LEASE and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE 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.CAP LEASE vs. PPHE Hotel Group | CAP LEASE vs. Silvercorp Metals | CAP LEASE vs. Southern Copper Corp | CAP LEASE vs. McEwen Mining |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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