Correlation Between Lindblad Expeditions and Eastman Chemical

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

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

Diversification Opportunities for Lindblad Expeditions and Eastman Chemical

0.32

Correlation Coefficient

Lindblad Expeditions  Eastman Chemical

Weak diversification

The 3 months correlation between Lindblad and Eastman is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Lindblad Expeditions i.e., Lindblad Expeditions and Eastman Chemical go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and Eastman Chemical

Given the investment horizon of 90 days Lindblad Expeditions Holdings is expected to generate 2.73 times more return on investment than Eastman Chemical. However, Lindblad Expeditions is 2.73 times more volatile than Eastman Chemical. It trades about 0.13 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.1 per unit of risk. If you would invest  757.00  in Lindblad Expeditions Holdings on June 20, 2024 and sell it today you would earn a total of  258.00  from holding Lindblad Expeditions Holdings or generate 34.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Lindblad Expeditions Holdings  vs.  Eastman Chemical

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.

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.

Pair Trading with Lindblad Expeditions and Eastman Chemical

The main advantage of trading using opposite Lindblad Expeditions and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindblad Expeditions 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 Lindblad Expeditions Holdings and Eastman Chemical 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.