Correlation Between Axalta Coating and Ashland Global
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Ashland Global 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 Ashland Global 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 Ashland Global Holdings, you can compare the effects of market volatilities on Axalta Coating and Ashland Global 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 Ashland Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Ashland Global.
Diversification Opportunities for Axalta Coating and Ashland Global
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Axalta and Ashland is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Ashland Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashland Global Holdings 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 Ashland Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashland Global Holdings has no effect on the direction of Axalta Coating i.e., Axalta Coating and Ashland Global go up and down completely randomly.
Pair Corralation between Axalta Coating and Ashland Global
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.43 times more return on investment than Ashland Global. However, Axalta Coating Systems is 2.31 times less risky than Ashland Global. It trades about 0.44 of its potential returns per unit of risk. Ashland Global Holdings is currently generating about -0.16 per unit of risk. If you would invest 3,356 in Axalta Coating Systems on November 2, 2024 and sell it today you would earn a total of 331.00 from holding Axalta Coating Systems or generate 9.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. Ashland Global Holdings
Performance |
| Timeline |
| Axalta Coating Systems |
| Ashland Global Holdings |
Axalta Coating and Ashland Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Ashland Global
The main advantage of trading using opposite Axalta Coating and Ashland Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, Ashland Global 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 Ashland Global will offset losses from the drop in Ashland Global's long position.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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