Correlation Between Albemarle and FMC
Can any of the company-specific risk be diversified away by investing in both Albemarle and FMC 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 Albemarle and FMC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albemarle and FMC Corporation, you can compare the effects of market volatilities on Albemarle and FMC 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 Albemarle with a short position of FMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle and FMC.
Diversification Opportunities for Albemarle and FMC
Very good diversification
The 3 months correlation between Albemarle and FMC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle and FMC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FMC Corporation and Albemarle 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 Albemarle are associated (or correlated) with FMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FMC Corporation has no effect on the direction of Albemarle i.e., Albemarle and FMC go up and down completely randomly.
Pair Corralation between Albemarle and FMC
Assuming the 90 days trading horizon Albemarle is expected to generate 0.92 times more return on investment than FMC. However, Albemarle is 1.08 times less risky than FMC. It trades about 0.2 of its potential returns per unit of risk. FMC Corporation is currently generating about -0.08 per unit of risk. If you would invest 4,364 in Albemarle on August 24, 2024 and sell it today you would earn a total of 547.00 from holding Albemarle or generate 12.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albemarle vs. FMC Corp.
Performance |
| Timeline |
| Albemarle |
| FMC Corporation |
Albemarle and FMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albemarle and FMC
The main advantage of trading using opposite Albemarle and FMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle position performs unexpectedly, FMC 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 FMC will offset losses from the drop in FMC's long position.| Albemarle vs. Lion One Metals | Albemarle vs. NioCorp Developments Ltd | Albemarle vs. FitLife Brands, Common | Albemarle vs. Hf Foods 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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