Correlation Between Avient Corp and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Avient Corp and ArcelorMittal 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 ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avient Corp and ArcelorMittal SA ADR, you can compare the effects of market volatilities on Avient Corp and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and ArcelorMittal.
Diversification Opportunities for Avient Corp and ArcelorMittal
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avient and ArcelorMittal is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Avient Corp i.e., Avient Corp and ArcelorMittal go up and down completely randomly.
Pair Corralation between Avient Corp and ArcelorMittal
Given the investment horizon of 90 days Avient Corp is expected to generate 1.04 times more return on investment than ArcelorMittal. However, Avient Corp is 1.04 times more volatile than ArcelorMittal SA ADR. It trades about 0.07 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about -0.01 per unit of risk. If you would invest 4,337 in Avient Corp on August 31, 2024 and sell it today you would earn a total of 788.00 from holding Avient Corp or generate 18.17% 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. ArcelorMittal SA ADR
Performance |
| Timeline |
| Avient Corp |
| ArcelorMittal SA ADR |
Avient Corp and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avient Corp and ArcelorMittal
The main advantage of trading using opposite Avient Corp and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Avient Corp vs. Axalta Coating Systems | Avient Corp vs. H B Fuller | Avient Corp vs. Quaker Chemical | Avient Corp vs. Cabot |
| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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