Correlation Between Eastman Chemical and Lumen Technologies,

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

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

Diversification Opportunities for Eastman Chemical and Lumen Technologies,

-0.32

Correlation Coefficient

Eastman Chemical  Lumen Technologies,

Very good diversification

The 3 months correlation between Eastman and Lumen is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Lumen Technologies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies, 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 are associated (or correlated) with Lumen Technologies,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies, has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Lumen Technologies, go up and down completely randomly.

Pair Corralation between Eastman Chemical and Lumen Technologies,

Assuming the 90 days trading horizon Eastman Chemical is expected to generate 0.03 times more return on investment than Lumen Technologies,. However, Eastman Chemical is 34.49 times less risky than Lumen Technologies,. It trades about 0.24 of its potential returns per unit of risk. Lumen Technologies, is currently generating about -0.11 per unit of risk. If you would invest  27,365  in Eastman Chemical on October 8, 2024 and sell it today you would earn a total of  175.00  from holding Eastman Chemical or generate 0.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eastman Chemical  vs.  Lumen Technologies,

Eastman Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Chemical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Eastman Chemical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Lumen Technologies,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lumen Technologies, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Lumen Technologies, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Eastman Chemical and Lumen Technologies,

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

The idea behind Eastman Chemical and Lumen Technologies, 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.