Correlation Between Balchem and Umpqua Holdings
Can any of the company-specific risk be diversified away by investing in both Balchem and Umpqua Holdings 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 Umpqua Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Umpqua Holdings, you can compare the effects of market volatilities on Balchem and Umpqua Holdings 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 Umpqua Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Umpqua Holdings.
Diversification Opportunities for Balchem and Umpqua Holdings
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Balchem and Umpqua is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Umpqua Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umpqua Holdings 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 Umpqua Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Umpqua Holdings has no effect on the direction of Balchem i.e., Balchem and Umpqua Holdings go up and down completely randomly.
Pair Corralation between Balchem and Umpqua Holdings
Given the investment horizon of 90 days Balchem is expected to generate 0.94 times more return on investment than Umpqua Holdings. However, Balchem is 1.06 times less risky than Umpqua Holdings. It trades about 0.06 of its potential returns per unit of risk. Umpqua Holdings is currently generating about 0.02 per unit of risk. If you would invest 12,100 in Balchem on September 5, 2024 and sell it today you would earn a total of 5,699 from holding Balchem or generate 47.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 10.51% |
| Values | Daily Returns |
Balchem vs. Umpqua Holdings
Performance |
| Timeline |
| Balchem |
| Umpqua Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Balchem and Umpqua Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Umpqua Holdings
The main advantage of trading using opposite Balchem and Umpqua Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Umpqua Holdings 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 Umpqua Holdings will offset losses from the drop in Umpqua Holdings' long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| Umpqua Holdings vs. Air Products and | Umpqua Holdings vs. Antero Midstream Partners | Umpqua Holdings vs. CenterPoint Energy | Umpqua Holdings vs. Balchem |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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