Correlation Between Eastman Chemical and Sixt Leasing

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

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

Diversification Opportunities for Eastman Chemical and Sixt Leasing

-0.1

Correlation Coefficient

Eastman Chemical  Sixt Leasing

Good diversification

The 3 months correlation between Eastman and Sixt is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE 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 Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Sixt Leasing go up and down completely randomly.

Pair Corralation between Eastman Chemical and Sixt Leasing

Assuming the 90 days horizon Eastman Chemical is expected to generate 0.87 times more return on investment than Sixt Leasing. However, Eastman Chemical is 1.15 times less risky than Sixt Leasing. It trades about 0.07 of its potential returns per unit of risk. Sixt Leasing SE is currently generating about -0.07 per unit of risk. If you would invest  8,861  in Eastman Chemical on September 13, 2024 and sell it today you would earn a total of  569.00  from holding Eastman Chemical or generate 6.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eastman Chemical  vs.  Sixt Leasing SE

Eastman Chemical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Chemical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Eastman Chemical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sixt Leasing SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sixt Leasing SE 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 Sixt Leasing

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

The idea behind Eastman Chemical and Sixt Leasing SE 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.