Correlation Between Axalta Coating and Safety Shot
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Safety Shot 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 Safety Shot 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 Safety Shot, you can compare the effects of market volatilities on Axalta Coating and Safety Shot 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 Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Safety Shot.
Diversification Opportunities for Axalta Coating and Safety Shot
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Axalta and Safety is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Axalta Coating i.e., Axalta Coating and Safety Shot go up and down completely randomly.
Pair Corralation between Axalta Coating and Safety Shot
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.28 times more return on investment than Safety Shot. However, Axalta Coating Systems is 3.6 times less risky than Safety Shot. It trades about -0.19 of its potential returns per unit of risk. Safety Shot is currently generating about -0.25 per unit of risk. If you would invest 4,129 in Axalta Coating Systems on October 26, 2024 and sell it today you would lose (435.00) from holding Axalta Coating Systems or give up 10.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Axalta Coating Systems vs. Safety Shot
Performance |
| Timeline |
| Axalta Coating Systems |
| Safety Shot |
Axalta Coating and Safety Shot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Safety Shot
The main advantage of trading using opposite Axalta Coating and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot's long position.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
| Safety Shot vs. NiSource | Safety Shot vs. Antero Midstream Partners | Safety Shot vs. Western Midstream Partners | Safety Shot vs. NioCorp Developments Ltd |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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