Correlation Between EASTMAN and Nio
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By analyzing existing cross correlation between EASTMAN CHEM 45 and Nio Class A, you can compare the effects of market volatilities on EASTMAN and Nio 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 with a short position of Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of EASTMAN and Nio.
Diversification Opportunities for EASTMAN and Nio
Very weak diversification
The 3 months correlation between EASTMAN and Nio is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding EASTMAN CHEM 45 and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A and EASTMAN 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 CHEM 45 are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of EASTMAN i.e., EASTMAN and Nio go up and down completely randomly.
Pair Corralation between EASTMAN and Nio
Assuming the 90 days trading horizon EASTMAN CHEM 45 is expected to generate 0.16 times more return on investment than Nio. However, EASTMAN CHEM 45 is 6.32 times less risky than Nio. It trades about 0.06 of its potential returns per unit of risk. Nio Class A is currently generating about -0.05 per unit of risk. If you would invest 9,772 in EASTMAN CHEM 45 on February 11, 2024 and sell it today you would earn a total of 216.00 from holding EASTMAN CHEM 45 or generate 2.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 96.83% |
Values | Daily Returns |
EASTMAN CHEM 45 vs. Nio Class A
Performance |
Timeline |
EASTMAN CHEM 45 |
Nio Class A |
EASTMAN and Nio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EASTMAN and Nio
The main advantage of trading using opposite EASTMAN and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EASTMAN position performs unexpectedly, Nio 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 Nio will offset losses from the drop in Nio's long position.EASTMAN vs. AEP TEX INC | EASTMAN vs. US BANK NATIONAL | EASTMAN vs. Micron Technology | EASTMAN vs. Universal Music Group |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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