Correlation Between Ashland Global and NewMarket
Can any of the company-specific risk be diversified away by investing in both Ashland Global and NewMarket 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 NewMarket 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 NewMarket, you can compare the effects of market volatilities on Ashland Global and NewMarket 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 NewMarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashland Global and NewMarket.
Diversification Opportunities for Ashland Global and NewMarket
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ashland and NewMarket is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and NewMarket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMarket 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 NewMarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMarket has no effect on the direction of Ashland Global i.e., Ashland Global and NewMarket go up and down completely randomly.
Pair Corralation between Ashland Global and NewMarket
Considering the 90-day investment horizon Ashland Global Holdings is expected to under-perform the NewMarket. In addition to that, Ashland Global is 1.12 times more volatile than NewMarket. It trades about -0.09 of its total potential returns per unit of risk. NewMarket is currently generating about -0.03 per unit of volatility. If you would invest 61,671 in NewMarket on November 21, 2024 and sell it today you would lose (7,427) from holding NewMarket or give up 12.04% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ashland Global Holdings vs. NewMarket
Performance |
Timeline |
Ashland Global Holdings |
NewMarket |
Ashland Global and NewMarket Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ashland Global and NewMarket
The main advantage of trading using opposite Ashland Global and NewMarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global position performs unexpectedly, NewMarket 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 NewMarket will offset losses from the drop in NewMarket's long position.Ashland Global vs. H B Fuller | ||
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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