Correlation Between Eastman Chemical and Lindblad Expeditions

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

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

Diversification Opportunities for Eastman Chemical and Lindblad Expeditions

0.32

Correlation Coefficient

Eastman Chemical  Lindblad Expeditions

Weak diversification

The 3 months correlation between Eastman and Lindblad is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Lindblad Expeditions Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindblad Expeditions 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 Lindblad Expeditions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindblad Expeditions has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Lindblad Expeditions go up and down completely randomly.

Pair Corralation between Eastman Chemical and Lindblad Expeditions

Considering the 90-day investment horizon Eastman Chemical is expected to generate 1.53 times less return on investment than Lindblad Expeditions. But when comparing it to its historical volatility, Eastman Chemical is 2.58 times less risky than Lindblad Expeditions. It trades about 0.11 of its potential returns per unit of risk. Lindblad Expeditions Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  745.00  in Lindblad Expeditions Holdings on June 20, 2024 and sell it today you would earn a total of  317.00  from holding Lindblad Expeditions Holdings or generate 42.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eastman Chemical  vs.  Lindblad Expeditions Holdings

Eastman Chemical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Chemical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Eastman Chemical may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Lindblad Expeditions

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastman Chemical and Lindblad Expeditions

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

The idea behind Eastman Chemical and Lindblad Expeditions Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.