Correlation Between Cabot and Core Molding
Can any of the company-specific risk be diversified away by investing in both Cabot and Core Molding 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 Core Molding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabot and Core Molding Technologies, you can compare the effects of market volatilities on Cabot and Core Molding 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 Core Molding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabot and Core Molding.
Diversification Opportunities for Cabot and Core Molding
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cabot and Core is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cabot and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies 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 Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Cabot i.e., Cabot and Core Molding go up and down completely randomly.
Pair Corralation between Cabot and Core Molding
Considering the 90-day investment horizon Cabot is expected to generate 3.75 times less return on investment than Core Molding. But when comparing it to its historical volatility, Cabot is 1.52 times less risky than Core Molding. It trades about 0.04 of its potential returns per unit of risk. Core Molding Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,550 in Core Molding Technologies on August 30, 2024 and sell it today you would earn a total of 111.00 from holding Core Molding Technologies or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cabot vs. Core Molding Technologies
Performance |
| Timeline |
| Cabot |
| Core Molding Technologies |
Cabot and Core Molding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabot and Core Molding
The main advantage of trading using opposite Cabot and Core Molding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabot position performs unexpectedly, Core Molding 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 Core Molding will offset losses from the drop in Core Molding's long position.The idea behind Cabot and Core Molding Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Core Molding vs. Innospec | Core Molding vs. H B Fuller | Core Molding vs. Quaker Chemical | Core Molding vs. Minerals Technologies |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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