Correlation Between Chemours and Albemarle
Can any of the company-specific risk be diversified away by investing in both Chemours and Albemarle 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 Chemours and Albemarle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Albemarle, you can compare the effects of market volatilities on Chemours and Albemarle 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 Chemours with a short position of Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Albemarle.
Diversification Opportunities for Chemours and Albemarle
Poor diversification
The 3 months correlation between Chemours and Albemarle is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle and Chemours 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 Chemours Co are associated (or correlated) with Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Chemours i.e., Chemours and Albemarle go up and down completely randomly.
Pair Corralation between Chemours and Albemarle
Allowing for the 90-day total investment horizon Chemours Co is expected to generate 1.46 times more return on investment than Albemarle. However, Chemours is 1.46 times more volatile than Albemarle. It trades about 0.21 of its potential returns per unit of risk. Albemarle is currently generating about 0.14 per unit of risk. If you would invest 1,824 in Chemours Co on August 27, 2024 and sell it today you would earn a total of 329.00 from holding Chemours Co or generate 18.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Albemarle
Performance |
| Timeline |
| Chemours |
| Albemarle |
Chemours and Albemarle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Albemarle
The main advantage of trading using opposite Chemours and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle's long position.| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
| Albemarle vs. Chemours Co | Albemarle vs. Dupont De Nemours | Albemarle vs. FutureFuel Corp | Albemarle vs. Danimer Scientific |
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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