Correlation Between Avantor and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Avantor and Axalta Coating 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 Avantor and Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantor and Axalta Coating Systems, you can compare the effects of market volatilities on Avantor and Axalta Coating 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 Avantor with a short position of Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantor and Axalta Coating.
Diversification Opportunities for Avantor and Axalta Coating
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Avantor and Axalta is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Avantor and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems and Avantor 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 Avantor are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Avantor i.e., Avantor and Axalta Coating go up and down completely randomly.
Pair Corralation between Avantor and Axalta Coating
Given the investment horizon of 90 days Avantor is expected to under-perform the Axalta Coating. But the stock apears to be less risky and, when comparing its historical volatility, Avantor is 1.53 times less risky than Axalta Coating. The stock trades about -0.28 of its potential returns per unit of risk. The Axalta Coating Systems is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,559 in Axalta Coating Systems on August 27, 2024 and sell it today you would earn a total of 493.00 from holding Axalta Coating Systems or generate 13.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantor vs. Axalta Coating Systems
Performance |
| Timeline |
| Avantor |
| Axalta Coating Systems |
Avantor and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantor and Axalta Coating
The main advantage of trading using opposite Avantor and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantor position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.| Avantor vs. Ashland Global Holdings | Avantor vs. H B Fuller | Avantor vs. Element Solutions | Avantor vs. Balchem |
| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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