Correlation Between Cabot and Danimer Scientific
Can any of the company-specific risk be diversified away by investing in both Cabot and Danimer Scientific 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 Danimer Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabot and Danimer Scientific, you can compare the effects of market volatilities on Cabot and Danimer Scientific 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 Danimer Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabot and Danimer Scientific.
Diversification Opportunities for Cabot and Danimer Scientific
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cabot and Danimer is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cabot and Danimer Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danimer Scientific 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 Danimer Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danimer Scientific has no effect on the direction of Cabot i.e., Cabot and Danimer Scientific go up and down completely randomly.
Pair Corralation between Cabot and Danimer Scientific
Considering the 90-day investment horizon Cabot is expected to generate 0.14 times more return on investment than Danimer Scientific. However, Cabot is 7.09 times less risky than Danimer Scientific. It trades about -0.16 of its potential returns per unit of risk. Danimer Scientific is currently generating about -0.21 per unit of risk. If you would invest 11,042 in Cabot on October 31, 2024 and sell it today you would lose (2,293) from holding Cabot or give up 20.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 81.71% |
| Values | Daily Returns |
Cabot vs. Danimer Scientific
Performance |
| Timeline |
| Cabot |
| Danimer Scientific |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cabot and Danimer Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabot and Danimer Scientific
The main advantage of trading using opposite Cabot and Danimer Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabot position performs unexpectedly, Danimer Scientific 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 Danimer Scientific will offset losses from the drop in Danimer Scientific's long position.The idea behind Cabot and Danimer Scientific 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.| Danimer Scientific vs. LyondellBasell Industries NV | Danimer Scientific vs. International Flavors Fragrances | Danimer Scientific vs. Cabot | Danimer Scientific vs. Westlake 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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