Correlation Between Ashland Global and Albemarle
Can any of the company-specific risk be diversified away by investing in both Ashland Global and Albemarle 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 Ashland Global and Albemarle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashland Global Holdings and Albemarle, you can compare the effects of market volatilities on Ashland Global and Albemarle 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 Ashland Global with a short position of Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashland Global and Albemarle.
Diversification Opportunities for Ashland Global and Albemarle
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ashland and Albemarle is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle and Ashland Global 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 Ashland Global Holdings are associated (or correlated) with Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Ashland Global i.e., Ashland Global and Albemarle go up and down completely randomly.
Pair Corralation between Ashland Global and Albemarle
Considering the 90-day investment horizon Ashland Global Holdings is expected to under-perform the Albemarle. But the stock apears to be less risky and, when comparing its historical volatility, Ashland Global Holdings is 1.33 times less risky than Albemarle. The stock trades about -0.14 of its potential returns per unit of risk. The Albemarle is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,509 in Albemarle on August 27, 2024 and sell it today you would earn a total of 456.00 from holding Albemarle or generate 10.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashland Global Holdings vs. Albemarle
Performance |
| Timeline |
| Ashland Global Holdings |
| Albemarle |
Ashland Global and Albemarle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashland Global and Albemarle
The main advantage of trading using opposite Ashland Global and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle's long position.| Ashland Global vs. H B Fuller | Ashland Global vs. Element Solutions | Ashland Global vs. Balchem | Ashland Global vs. Avantor |
| Albemarle vs. Chemours Co | Albemarle vs. Dupont De Nemours | Albemarle vs. FutureFuel Corp | Albemarle vs. Danimer Scientific |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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