Correlation Between Chemours and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Chemours and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and BBB Foods, you can compare the effects of market volatilities on Chemours and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and BBB Foods.
Diversification Opportunities for Chemours and BBB Foods
Good diversification
The 3 months correlation between Chemours and BBB is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Chemours i.e., Chemours and BBB Foods go up and down completely randomly.
Pair Corralation between Chemours and BBB Foods
Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the BBB Foods. In addition to that, Chemours is 1.12 times more volatile than BBB Foods. It trades about -0.01 of its total potential returns per unit of risk. BBB Foods is currently generating about 0.09 per unit of volatility. If you would invest 1,750 in BBB Foods on November 2, 2024 and sell it today you would earn a total of 1,359 from holding BBB Foods or generate 77.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 49.9% |
| Values | Daily Returns |
Chemours Co vs. BBB Foods
Performance |
| Timeline |
| Chemours |
| BBB Foods |
Chemours and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and BBB Foods
The main advantage of trading using opposite Chemours and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Chemours vs. International Flavors Fragrances | Chemours vs. Air Products and | Chemours vs. PPG Industries | Chemours vs. Linde plc Ordinary |
| BBB Foods vs. Old Dominion Freight | BBB Foods vs. Delek Logistics Partners | BBB Foods vs. Weyco Group | BBB Foods vs. Radcom |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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