Correlation Between Cabot and Perimeter Solutions
Can any of the company-specific risk be diversified away by investing in both Cabot and Perimeter 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 Perimeter Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabot and Perimeter Solutions SA, you can compare the effects of market volatilities on Cabot and Perimeter 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 Perimeter Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabot and Perimeter Solutions.
Diversification Opportunities for Cabot and Perimeter Solutions
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cabot and Perimeter is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cabot and Perimeter Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perimeter 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 Perimeter Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perimeter Solutions has no effect on the direction of Cabot i.e., Cabot and Perimeter Solutions go up and down completely randomly.
Pair Corralation between Cabot and Perimeter Solutions
Considering the 90-day investment horizon Cabot is expected to generate 0.62 times more return on investment than Perimeter Solutions. However, Cabot is 1.62 times less risky than Perimeter Solutions. It trades about 0.04 of its potential returns per unit of risk. Perimeter Solutions SA is currently generating about -0.07 per unit of risk. If you would invest 10,887 in Cabot on August 30, 2024 and sell it today you would earn a total of 172.00 from holding Cabot or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cabot vs. Perimeter Solutions SA
Performance |
| Timeline |
| Cabot |
| Perimeter Solutions |
Cabot and Perimeter Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabot and Perimeter Solutions
The main advantage of trading using opposite Cabot and Perimeter Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabot position performs unexpectedly, Perimeter 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 Perimeter Solutions will offset losses from the drop in Perimeter Solutions' long position.The idea behind Cabot and Perimeter Solutions SA 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.| Perimeter Solutions vs. Kronos Worldwide | Perimeter Solutions vs. Sensient Technologies | Perimeter Solutions vs. Element Solutions | Perimeter Solutions vs. Trinseo SA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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