Correlation Between INFORMATION SVC and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC and Eastman Chemical 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 INFORMATION SVC and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INFORMATION SVC GRP and Eastman Chemical, you can compare the effects of market volatilities on INFORMATION SVC and Eastman Chemical 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 INFORMATION SVC with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and Eastman Chemical.
Diversification Opportunities for INFORMATION SVC and Eastman Chemical
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between INFORMATION and Eastman is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and INFORMATION SVC 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 INFORMATION SVC GRP are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of INFORMATION SVC i.e., INFORMATION SVC and Eastman Chemical go up and down completely randomly.
Pair Corralation between INFORMATION SVC and Eastman Chemical
Assuming the 90 days horizon INFORMATION SVC GRP is expected to generate 1.59 times more return on investment than Eastman Chemical. However, INFORMATION SVC is 1.59 times more volatile than Eastman Chemical. It trades about 0.09 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.09 per unit of risk. If you would invest 309.00 in INFORMATION SVC GRP on September 2, 2024 and sell it today you would earn a total of 37.00 from holding INFORMATION SVC GRP or generate 11.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
INFORMATION SVC GRP vs. Eastman Chemical
Performance |
Timeline |
INFORMATION SVC GRP |
Eastman Chemical |
INFORMATION SVC and Eastman Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with INFORMATION SVC and Eastman Chemical
The main advantage of trading using opposite INFORMATION SVC and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.INFORMATION SVC vs. SIVERS SEMICONDUCTORS AB | INFORMATION SVC vs. Darden Restaurants | INFORMATION SVC vs. Reliance Steel Aluminum | INFORMATION SVC vs. Q2M Managementberatung AG |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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