Correlation Between Avient Corp and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Avient Corp and Element Solutions 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 Avient Corp and Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avient Corp and Element Solutions, you can compare the effects of market volatilities on Avient Corp and Element Solutions 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 Avient Corp with a short position of Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and Element Solutions.
Diversification Opportunities for Avient Corp and Element Solutions
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avient and Element is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions and Avient 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 Avient Corp are associated (or correlated) with Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Avient Corp i.e., Avient Corp and Element Solutions go up and down completely randomly.
Pair Corralation between Avient Corp and Element Solutions
Given the investment horizon of 90 days Avient Corp is expected to generate 1.03 times more return on investment than Element Solutions. However, Avient Corp is 1.03 times more volatile than Element Solutions. It trades about 0.1 of its potential returns per unit of risk. Element Solutions is currently generating about 0.08 per unit of risk. If you would invest 3,452 in Avient Corp on August 29, 2024 and sell it today you would earn a total of 1,761 from holding Avient Corp or generate 51.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avient Corp vs. Element Solutions
Performance |
| Timeline |
| Avient Corp |
| Element Solutions |
Avient Corp and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avient Corp and Element Solutions
The main advantage of trading using opposite Avient Corp and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Avient Corp vs. Direxion Daily FTSE | Avient Corp vs. Collegium Pharmaceutical | Avient Corp vs. KKR Co LP | Avient Corp vs. iShares Dividend and |
| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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