Correlation Between Balchem and Ecovyst
Can any of the company-specific risk be diversified away by investing in both Balchem and Ecovyst 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 Balchem and Ecovyst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Ecovyst, you can compare the effects of market volatilities on Balchem and Ecovyst 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 Balchem with a short position of Ecovyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Ecovyst.
Diversification Opportunities for Balchem and Ecovyst
Very weak diversification
The 3 months correlation between Balchem and Ecovyst is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst and Balchem 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 Balchem are associated (or correlated) with Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of Balchem i.e., Balchem and Ecovyst go up and down completely randomly.
Pair Corralation between Balchem and Ecovyst
Given the investment horizon of 90 days Balchem is expected to under-perform the Ecovyst. But the stock apears to be less risky and, when comparing its historical volatility, Balchem is 2.02 times less risky than Ecovyst. The stock trades about -0.05 of its potential returns per unit of risk. The Ecovyst is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 634.00 in Ecovyst on October 26, 2024 and sell it today you would earn a total of 151.00 from holding Ecovyst or generate 23.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. Ecovyst
Performance |
| Timeline |
| Balchem |
| Ecovyst |
Balchem and Ecovyst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Ecovyst
The main advantage of trading using opposite Balchem and Ecovyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Ecovyst 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 Ecovyst will offset losses from the drop in Ecovyst's long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| Ecovyst vs. Orion Engineered Carbons | Ecovyst vs. Cabot | Ecovyst vs. Minerals Technologies | Ecovyst vs. Quaker Chemical |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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