Correlation Between Albemarle Corp and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Albemarle Corp and Axalta Coating 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 Corp and Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albemarle Corp and Axalta Coating Systems, you can compare the effects of market volatilities on Albemarle Corp and Axalta Coating 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 Corp with a short position of Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle Corp and Axalta Coating.
Diversification Opportunities for Albemarle Corp and Axalta Coating
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Albemarle and Axalta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle Corp and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems and Albemarle Corp 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 Corp are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Albemarle Corp i.e., Albemarle Corp and Axalta Coating go up and down completely randomly.
Pair Corralation between Albemarle Corp and Axalta Coating
Considering the 90-day investment horizon Albemarle Corp is expected to generate 1.7 times more return on investment than Axalta Coating. However, Albemarle Corp is 1.7 times more volatile than Axalta Coating Systems. It trades about 0.2 of its potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.26 per unit of risk. If you would invest 9,396 in Albemarle Corp on August 24, 2024 and sell it today you would earn a total of 1,482 from holding Albemarle Corp or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albemarle Corp vs. Axalta Coating Systems
Performance |
| Timeline |
| Albemarle Corp |
| Axalta Coating Systems |
Albemarle Corp and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albemarle Corp and Axalta Coating
The main advantage of trading using opposite Albemarle Corp and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle Corp position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.| Albemarle Corp vs. Eshallgo Class A | Albemarle Corp vs. Amtech Systems | Albemarle Corp vs. Gold Fields Ltd | Albemarle Corp vs. Aegean Airlines SA |
| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |