Correlation Between Eastman Chemical and Icon Energy

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Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Icon Energy 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 Icon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Icon Energy Corp, you can compare the effects of market volatilities on Eastman Chemical and Icon Energy 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 Icon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Icon Energy.

Diversification Opportunities for Eastman Chemical and Icon Energy

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Eastman and Icon is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Icon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Energy Corp 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 Icon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Energy Corp has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Icon Energy go up and down completely randomly.

Pair Corralation between Eastman Chemical and Icon Energy

Considering the 90-day investment horizon Eastman Chemical is expected to generate 0.28 times more return on investment than Icon Energy. However, Eastman Chemical is 3.55 times less risky than Icon Energy. It trades about 0.0 of its potential returns per unit of risk. Icon Energy Corp is currently generating about -0.06 per unit of risk. If you would invest  9,701  in Eastman Chemical on September 19, 2024 and sell it today you would lose (55.00) from holding Eastman Chemical or give up 0.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy88.8%
ValuesDaily Returns

Eastman Chemical  vs.  Icon Energy Corp

 Performance 
       Timeline  
Eastman Chemical 

Risk-Adjusted Performance

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Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Icon Energy Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Icon Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Icon Energy is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Eastman Chemical and Icon Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eastman Chemical and Icon Energy

The main advantage of trading using opposite Eastman Chemical and Icon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Icon Energy 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 Icon Energy will offset losses from the drop in Icon Energy's long position.
The idea behind Eastman Chemical and Icon Energy Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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