Correlation Between Chemours and Bt Brands
Can any of the company-specific risk be diversified away by investing in both Chemours and Bt Brands 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 Bt Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Bt Brands, you can compare the effects of market volatilities on Chemours and Bt Brands 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 Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Bt Brands.
Diversification Opportunities for Chemours and Bt Brands
Very good diversification
The 3 months correlation between Chemours and BTBD is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Chemours i.e., Chemours and Bt Brands go up and down completely randomly.
Pair Corralation between Chemours and Bt Brands
Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Bt Brands. But the stock apears to be less risky and, when comparing its historical volatility, Chemours Co is 1.25 times less risky than Bt Brands. The stock trades about -0.05 of its potential returns per unit of risk. The Bt Brands is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 156.00 in Bt Brands on September 19, 2024 and sell it today you would earn a total of 8.00 from holding Bt Brands or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Bt Brands
Performance |
| Timeline |
| Chemours |
| Bt Brands |
Chemours and Bt Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Bt Brands
The main advantage of trading using opposite Chemours and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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