Correlation Between Axalta Coating and Johnson Matthey
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Johnson Matthey 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 Johnson Matthey 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 Johnson Matthey Plc, you can compare the effects of market volatilities on Axalta Coating and Johnson Matthey 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 Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Johnson Matthey.
Diversification Opportunities for Axalta Coating and Johnson Matthey
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Axalta and Johnson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Johnson Matthey Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey Plc 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 Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey Plc has no effect on the direction of Axalta Coating i.e., Axalta Coating and Johnson Matthey go up and down completely randomly.
Pair Corralation between Axalta Coating and Johnson Matthey
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.47 times more return on investment than Johnson Matthey. However, Axalta Coating Systems is 2.14 times less risky than Johnson Matthey. It trades about 0.04 of its potential returns per unit of risk. Johnson Matthey Plc is currently generating about -0.03 per unit of risk. If you would invest 2,927 in Axalta Coating Systems on November 2, 2024 and sell it today you would earn a total of 760.00 from holding Axalta Coating Systems or generate 25.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 37.04% |
| Values | Daily Returns |
Axalta Coating Systems vs. Johnson Matthey Plc
Performance |
| Timeline |
| Axalta Coating Systems |
| Johnson Matthey Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Axalta Coating and Johnson Matthey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Johnson Matthey
The main advantage of trading using opposite Axalta Coating and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, Johnson Matthey 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 Johnson Matthey will offset losses from the drop in Johnson Matthey's long position.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
| Johnson Matthey vs. Neo Performance Materials | Johnson Matthey vs. Sensient Technologies | Johnson Matthey vs. Koppers Holdings | Johnson Matthey vs. Axalta Coating Systems |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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