Correlation Between Eastman Chemical and IShares Physical

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

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

Diversification Opportunities for Eastman Chemical and IShares Physical

0.46

Correlation Coefficient

Eastman Chemical  IShares Physical

Very weak diversification

The 3 months correlation between Eastman and IShares is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and iShares Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Physical Silver 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 Co are associated (or correlated) with IShares Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Physical Silver has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and IShares Physical go up and down completely randomly.

Pair Corralation between Eastman Chemical and IShares Physical

Assuming the 90 days trading horizon Eastman Chemical Co is expected to under-perform the IShares Physical. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical Co is 1.4 times less risky than IShares Physical. The stock trades about -0.21 of its potential returns per unit of risk. The iShares Physical Silver is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,046  in iShares Physical Silver on September 25, 2024 and sell it today you would lose (224.00) from holding iShares Physical Silver or give up 7.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Eastman Chemical Co  vs.  iShares Physical Silver

Eastman Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastman Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

iShares Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Physical Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Eastman Chemical and IShares Physical

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

The idea behind Eastman Chemical Co and iShares Physical Silver 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.