Correlation Between Core Molding and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Core Molding and Quaker Chemical 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 Core Molding and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Molding Technologies and Quaker Chemical, you can compare the effects of market volatilities on Core Molding and Quaker Chemical 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 Core Molding with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Molding and Quaker Chemical.
Diversification Opportunities for Core Molding and Quaker Chemical
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Core and Quaker is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Core Molding Technologies and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Core Molding 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 Core Molding Technologies are associated (or correlated) with Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Core Molding i.e., Core Molding and Quaker Chemical go up and down completely randomly.
Pair Corralation between Core Molding and Quaker Chemical
Considering the 90-day investment horizon Core Molding Technologies is expected to generate 1.5 times more return on investment than Quaker Chemical. However, Core Molding is 1.5 times more volatile than Quaker Chemical. It trades about 0.01 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.05 per unit of risk. If you would invest 1,853 in Core Molding Technologies on August 25, 2024 and sell it today you would lose (103.00) from holding Core Molding Technologies or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Molding Technologies vs. Quaker Chemical
Performance |
| Timeline |
| Core Molding Technologies |
| Quaker Chemical |
Core Molding and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Molding and Quaker Chemical
The main advantage of trading using opposite Core Molding and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Molding position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Core Molding vs. Innospec | Core Molding vs. H B Fuller | Core Molding vs. Quaker Chemical | Core Molding vs. Minerals Technologies |
| Quaker Chemical vs. Minerals Technologies | Quaker Chemical vs. Oil Dri | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Northern 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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