Correlation Between Axalta Coating and Albemarle Corp
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Albemarle Corp 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 Axalta Coating and Albemarle Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and Albemarle Corp, you can compare the effects of market volatilities on Axalta Coating and Albemarle Corp 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 Axalta Coating with a short position of Albemarle Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Albemarle Corp.
Diversification Opportunities for Axalta Coating and Albemarle Corp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axalta and Albemarle is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Albemarle Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle Corp and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Albemarle Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle Corp has no effect on the direction of Axalta Coating i.e., Axalta Coating and Albemarle Corp go up and down completely randomly.
Pair Corralation between Axalta Coating and Albemarle Corp
Given the investment horizon of 90 days Axalta Coating is expected to generate 2.34 times less return on investment than Albemarle Corp. But when comparing it to its historical volatility, Axalta Coating Systems is 2.51 times less risky than Albemarle Corp. It trades about 0.19 of its potential returns per unit of risk. Albemarle Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 9,552 in Albemarle Corp on August 31, 2024 and sell it today you would earn a total of 1,246 from holding Albemarle Corp or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. Albemarle Corp
Performance |
| Timeline |
| Axalta Coating Systems |
| Albemarle Corp |
Axalta Coating and Albemarle Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Albemarle Corp
The main advantage of trading using opposite Axalta Coating and Albemarle Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, Albemarle Corp 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 Albemarle Corp will offset losses from the drop in Albemarle Corp's long position.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
| Albemarle Corp vs. Eastman Chemical | Albemarle Corp vs. Linde plc Ordinary | Albemarle Corp vs. Ecolab Inc | Albemarle Corp vs. Sherwin Williams Co |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |