Correlation Between Eastman Chemical and Dupont De

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

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

Diversification Opportunities for Eastman Chemical and Dupont De

0.64

Correlation Coefficient

Eastman Chemical  Dupont De

Poor diversification

The 3 months correlation between Eastman and Dupont is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Dupont De Nemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont De Nemours 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 Dupont De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont De Nemours has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Dupont De go up and down completely randomly.

Pair Corralation between Eastman Chemical and Dupont De

Considering the 90-day investment horizon Eastman Chemical is expected to under-perform the Dupont De. In addition to that, Eastman Chemical is 1.17 times more volatile than Dupont De Nemours. It trades about 0.0 of its total potential returns per unit of risk. Dupont De Nemours is currently generating about 0.02 per unit of volatility. If you would invest  7,557  in Dupont De Nemours on December 28, 2024 and sell it today you would earn a total of  92.00  from holding Dupont De Nemours or generate 1.22% return on investment over 90 days.

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

Eastman Chemical  vs.  Dupont De Nemours

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. In spite of very healthy primary indicators, Eastman Chemical is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Dupont De Nemours

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eastman Chemical and Dupont De

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

The idea behind Eastman Chemical and Dupont De Nemours 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.