Correlation Between Axalta Coating and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and PacifiCorp 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 PacifiCorp 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 PacifiCorp, you can compare the effects of market volatilities on Axalta Coating and PacifiCorp 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 PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and PacifiCorp.
Diversification Opportunities for Axalta Coating and PacifiCorp
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Axalta and PacifiCorp is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp 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 PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Axalta Coating i.e., Axalta Coating and PacifiCorp go up and down completely randomly.
Pair Corralation between Axalta Coating and PacifiCorp
Given the investment horizon of 90 days Axalta Coating is expected to generate 4.52 times less return on investment than PacifiCorp. But when comparing it to its historical volatility, Axalta Coating Systems is 3.56 times less risky than PacifiCorp. It trades about 0.04 of its potential returns per unit of risk. PacifiCorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,537 in PacifiCorp on October 11, 2024 and sell it today you would earn a total of 5,463 from holding PacifiCorp or generate 43.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.04% |
| Values | Daily Returns |
Axalta Coating Systems vs. PacifiCorp
Performance |
| Timeline |
| Axalta Coating Systems |
| PacifiCorp |
Axalta Coating and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and PacifiCorp
The main advantage of trading using opposite Axalta Coating and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, PacifiCorp 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 PacifiCorp will offset losses from the drop in PacifiCorp's long position.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
| PacifiCorp vs. Flexible Solutions International | PacifiCorp vs. Chester Mining | PacifiCorp vs. Axalta Coating Systems | PacifiCorp vs. ioneer Ltd American |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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