Correlation Between CN Energy and Innospec
Can any of the company-specific risk be diversified away by investing in both CN Energy and Innospec 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 CN Energy and Innospec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN Energy Group and Innospec, you can compare the effects of market volatilities on CN Energy and Innospec 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 CN Energy with a short position of Innospec. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN Energy and Innospec.
Diversification Opportunities for CN Energy and Innospec
Very good diversification
The 3 months correlation between CNEY and Innospec is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CN Energy Group and Innospec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innospec and CN Energy 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 CN Energy Group are associated (or correlated) with Innospec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innospec has no effect on the direction of CN Energy i.e., CN Energy and Innospec go up and down completely randomly.
Pair Corralation between CN Energy and Innospec
Given the investment horizon of 90 days CN Energy Group is expected to generate 15.74 times more return on investment than Innospec. However, CN Energy is 15.74 times more volatile than Innospec. It trades about 0.02 of its potential returns per unit of risk. Innospec is currently generating about -0.19 per unit of risk. If you would invest 39.00 in CN Energy Group on September 13, 2024 and sell it today you would lose (5.00) from holding CN Energy Group or give up 12.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN Energy Group vs. Innospec
Performance |
| Timeline |
| CN Energy Group |
| Innospec |
CN Energy and Innospec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN Energy and Innospec
The main advantage of trading using opposite CN Energy and Innospec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN Energy position performs unexpectedly, Innospec 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 Innospec will offset losses from the drop in Innospec's long position.| CN Energy vs. Innospec | CN Energy vs. Minerals Technologies | CN Energy vs. Oil Dri | CN Energy vs. Quaker Chemical |
| Innospec vs. Minerals Technologies | Innospec vs. Oil Dri | Innospec vs. Quaker Chemical | Innospec vs. Sensient 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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