Correlation Between Croda International and Mondi PLC
Can any of the company-specific risk be diversified away by investing in both Croda International and Mondi PLC 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 Croda International and Mondi PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Croda International PLC and Mondi PLC ADR, you can compare the effects of market volatilities on Croda International and Mondi PLC 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 Croda International with a short position of Mondi PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Croda International and Mondi PLC.
Diversification Opportunities for Croda International and Mondi PLC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Croda and Mondi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Croda International PLC and Mondi PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondi PLC ADR and Croda International 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 Croda International PLC are associated (or correlated) with Mondi PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondi PLC ADR has no effect on the direction of Croda International i.e., Croda International and Mondi PLC go up and down completely randomly.
Pair Corralation between Croda International and Mondi PLC
Assuming the 90 days horizon Croda International PLC is expected to generate 1.36 times more return on investment than Mondi PLC. However, Croda International is 1.36 times more volatile than Mondi PLC ADR. It trades about -0.12 of its potential returns per unit of risk. Mondi PLC ADR is currently generating about -0.25 per unit of risk. If you would invest 2,401 in Croda International PLC on August 29, 2024 and sell it today you would lose (155.00) from holding Croda International PLC or give up 6.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Croda International PLC vs. Mondi PLC ADR
Performance |
| Timeline |
| Croda International PLC |
| Mondi PLC ADR |
Croda International and Mondi PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Croda International and Mondi PLC
The main advantage of trading using opposite Croda International and Mondi PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Croda International position performs unexpectedly, Mondi PLC 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 Mondi PLC will offset losses from the drop in Mondi PLC's long position.| Croda International vs. PPG Industries | Croda International vs. Ecolab Inc | Croda International vs. Sherwin Williams Co | Croda International vs. Air Products and |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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