Correlation Between Eastman Chemical and MPLX LP

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

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

Diversification Opportunities for Eastman Chemical and MPLX LP

0.0

Correlation Coefficient

Eastman Chemical  MPLX LP

Pay attention - limited upside

The 3 months correlation between Eastman and MPLX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and MPLX LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPLX LP 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 MPLX LP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPLX LP has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and MPLX LP go up and down completely randomly.

Pair Corralation between Eastman Chemical and MPLX LP

If you would invest  0.00  in MPLX LP on December 2, 2024 and sell it today you would earn a total of  0.00  from holding MPLX LP or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Eastman Chemical  vs.  MPLX LP

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.

MPLX LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days MPLX LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, MPLX LP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Eastman Chemical and MPLX LP

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

The idea behind Eastman Chemical and MPLX LP 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.