Correlation Between Ashland Global and Stepan
Can any of the company-specific risk be diversified away by investing in both Ashland Global and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Ashland Global and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashland Global and Stepan.
Diversification Opportunities for Ashland Global and Stepan
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ashland and Stepan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Ashland Global i.e., Ashland Global and Stepan go up and down completely randomly.
Pair Corralation between Ashland Global and Stepan
Considering the 90-day investment horizon Ashland Global Holdings is expected to under-perform the Stepan. But the stock apears to be less risky and, when comparing its historical volatility, Ashland Global Holdings is 1.12 times less risky than Stepan. The stock trades about -0.18 of its potential returns per unit of risk. The Stepan Company is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,273 in Stepan Company on August 24, 2024 and sell it today you would earn a total of 327.00 from holding Stepan Company or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashland Global Holdings vs. Stepan Company
Performance |
| Timeline |
| Ashland Global Holdings |
| Stepan Company |
Ashland Global and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashland Global and Stepan
The main advantage of trading using opposite Ashland Global and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Ashland Global vs. H B Fuller | Ashland Global vs. Element Solutions | Ashland Global vs. Balchem | Ashland Global vs. Avantor |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |