Correlation Between Eastman Chemical and BORR DRILLING

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

Diversification Opportunities for Eastman Chemical and BORR DRILLING

EastmanBORRDiversified AwayEastmanBORRDiversified Away100%
0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Eastman and BORR is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and BORR DRILLING go up and down completely randomly.

Pair Corralation between Eastman Chemical and BORR DRILLING

Assuming the 90 days horizon Eastman Chemical is expected to generate 0.37 times more return on investment than BORR DRILLING. However, Eastman Chemical is 2.7 times less risky than BORR DRILLING. It trades about -0.04 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about -0.1 per unit of risk. If you would invest  9,437  in Eastman Chemical on September 21, 2024 and sell it today you would lose (395.00) from holding Eastman Chemical or give up 4.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Eastman Chemical  vs.  BORR DRILLING NEW

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -30-20-100
JavaScript chart by amCharts 3.21.15EAC B2W
       Timeline  
Eastman Chemical 

Risk-Adjusted Performance

0 of 100

 
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Strong
Very Weak
Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eastman Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec92949698100
BORR DRILLING NEW 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BORR DRILLING NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec3.544.55

Eastman Chemical and BORR DRILLING Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.22-1.68-1.14-0.6-0.06450.430.971.512.052.59 0.050.100.150.20
JavaScript chart by amCharts 3.21.15EAC B2W
       Returns  

Pair Trading with Eastman Chemical and BORR DRILLING

The main advantage of trading using opposite Eastman Chemical and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.
The idea behind Eastman Chemical and BORR DRILLING NEW 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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