Correlation Between Cabot and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Cabot and Element Solutions 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 Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabot and Element Solutions, you can compare the effects of market volatilities on Cabot and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabot and Element Solutions.
Diversification Opportunities for Cabot and Element Solutions
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cabot and Element is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cabot and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Cabot i.e., Cabot and Element Solutions go up and down completely randomly.
Pair Corralation between Cabot and Element Solutions
Considering the 90-day investment horizon Cabot is expected to generate 1.79 times less return on investment than Element Solutions. In addition to that, Cabot is 1.05 times more volatile than Element Solutions. It trades about 0.04 of its total potential returns per unit of risk. Element Solutions is currently generating about 0.07 per unit of volatility. If you would invest 2,392 in Element Solutions on August 24, 2024 and sell it today you would earn a total of 464.00 from holding Element Solutions or generate 19.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cabot vs. Element Solutions
Performance |
| Timeline |
| Cabot |
| Element Solutions |
Cabot and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabot and Element Solutions
The main advantage of trading using opposite Cabot and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabot position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Cabot vs. Eastman Chemical | Cabot vs. Olin Corporation | Cabot vs. LyondellBasell Industries NV | Cabot vs. Air Products and |
| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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