Correlation Between Eastman Chemical and Packaging

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

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

Diversification Opportunities for Eastman Chemical and Packaging

0.11

Correlation Coefficient

Eastman Chemical  Packaging

Average diversification

The 3 months correlation between Eastman and Packaging is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Packaging of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging 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 Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Packaging go up and down completely randomly.

Pair Corralation between Eastman Chemical and Packaging

Assuming the 90 days horizon Eastman Chemical is expected to generate 0.88 times more return on investment than Packaging. However, Eastman Chemical is 1.13 times less risky than Packaging. It trades about -0.04 of its potential returns per unit of risk. Packaging of is currently generating about -0.12 per unit of risk. If you would invest  8,648  in Eastman Chemical on December 30, 2024 and sell it today you would lose (430.00) from holding Eastman Chemical or give up 4.97% of portfolio value over 90 days.

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

Eastman Chemical  vs.  Packaging of

Eastman Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eastman Chemical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Packaging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Packaging of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Eastman Chemical and Packaging

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

The idea behind Eastman Chemical and Packaging of 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.