Correlation Between AGC and Akzo Nobel
Can any of the company-specific risk be diversified away by investing in both AGC and Akzo Nobel 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 AGC and Akzo Nobel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGC Inc ADR and Akzo Nobel NV, you can compare the effects of market volatilities on AGC and Akzo Nobel 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 AGC with a short position of Akzo Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGC and Akzo Nobel.
Diversification Opportunities for AGC and Akzo Nobel
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AGC and Akzo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding AGC Inc ADR and Akzo Nobel NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akzo Nobel NV and AGC 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 AGC Inc ADR are associated (or correlated) with Akzo Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akzo Nobel NV has no effect on the direction of AGC i.e., AGC and Akzo Nobel go up and down completely randomly.
Pair Corralation between AGC and Akzo Nobel
Assuming the 90 days horizon AGC Inc ADR is expected to generate about the same return on investment as Akzo Nobel NV. However, AGC is 1.08 times more volatile than Akzo Nobel NV. It trades about -0.01 of its potential returns per unit of risk. Akzo Nobel NV is currently producing about -0.01 per unit of risk. If you would invest 7,484 in Akzo Nobel NV on November 2, 2024 and sell it today you would lose (1,082) from holding Akzo Nobel NV or give up 14.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 68.36% |
| Values | Daily Returns |
AGC Inc ADR vs. Akzo Nobel NV
Performance |
| Timeline |
| AGC Inc ADR |
| Akzo Nobel NV |
AGC and Akzo Nobel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGC and Akzo Nobel
The main advantage of trading using opposite AGC and Akzo Nobel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGC position performs unexpectedly, Akzo Nobel 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 Akzo Nobel will offset losses from the drop in Akzo Nobel's long position.| AGC vs. Asahi Kaisei Corp | AGC vs. Nitto Denko Corp | AGC vs. Daiwa House Industry | AGC vs. Ajinomoto Co ADR |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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