Correlation Between Blackrock World and Eastman Chemical

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

By analyzing existing cross correlation between Blackrock World Mining and Eastman Chemical Co, you can compare the effects of market volatilities on Blackrock World 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 Blackrock World with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock World and Eastman Chemical.

Diversification Opportunities for Blackrock World and Eastman Chemical

0.67

Correlation Coefficient

Blackrock World  Eastman Chemical

Poor diversification

The 3 months correlation between Blackrock and Eastman is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock World Mining and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Blackrock World 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 Blackrock World Mining 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 Blackrock World i.e., Blackrock World and Eastman Chemical go up and down completely randomly.

Pair Corralation between Blackrock World and Eastman Chemical

Assuming the 90 days trading horizon Blackrock World Mining is expected to generate 1.08 times more return on investment than Eastman Chemical. However, Blackrock World is 1.08 times more volatile than Eastman Chemical Co. It trades about -0.04 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about -0.14 per unit of risk. If you would invest  50,395  in Blackrock World Mining on September 20, 2024 and sell it today you would lose (2,345) from holding Blackrock World Mining or give up 4.65% of portfolio value over 90 days.

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

Blackrock World Mining  vs.  Eastman Chemical Co

Blackrock World Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock World Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Blackrock World is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 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 Blackrock World and Eastman Chemical

The main advantage of trading using opposite Blackrock World and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock World 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.

The idea behind Blackrock World Mining and Eastman Chemical Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.