Correlation Between Cabot and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Cabot and Axalta Coating 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 Cabot and Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabot and Axalta Coating Systems, you can compare the effects of market volatilities on Cabot and Axalta Coating 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 Cabot with a short position of Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabot and Axalta Coating.
Diversification Opportunities for Cabot and Axalta Coating
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cabot and Axalta is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cabot and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems and Cabot 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 Cabot are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Cabot i.e., Cabot and Axalta Coating go up and down completely randomly.
Pair Corralation between Cabot and Axalta Coating
Considering the 90-day investment horizon Cabot is expected to generate 12.17 times less return on investment than Axalta Coating. But when comparing it to its historical volatility, Cabot is 1.02 times less risky than Axalta Coating. It trades about 0.02 of its potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,526 in Axalta Coating Systems on August 24, 2024 and sell it today you would earn a total of 452.00 from holding Axalta Coating Systems or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cabot vs. Axalta Coating Systems
Performance |
| Timeline |
| Cabot |
| Axalta Coating Systems |
Cabot and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabot and Axalta Coating
The main advantage of trading using opposite Cabot and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabot position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.| Cabot vs. Eshallgo Class A | Cabot vs. Amtech Systems | Cabot vs. Gold Fields Ltd | Cabot vs. Aegean Airlines SA |
| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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