Correlation Between Crown Electrokinetics and NewMarket
Can any of the company-specific risk be diversified away by investing in both Crown Electrokinetics and NewMarket 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 Crown Electrokinetics and NewMarket into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Electrokinetics Corp and NewMarket, you can compare the effects of market volatilities on Crown Electrokinetics and NewMarket 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 Crown Electrokinetics with a short position of NewMarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Electrokinetics and NewMarket.
Diversification Opportunities for Crown Electrokinetics and NewMarket
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crown and NewMarket is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Crown Electrokinetics Corp and NewMarket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMarket and Crown Electrokinetics 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 Crown Electrokinetics Corp are associated (or correlated) with NewMarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMarket has no effect on the direction of Crown Electrokinetics i.e., Crown Electrokinetics and NewMarket go up and down completely randomly.
Pair Corralation between Crown Electrokinetics and NewMarket
Given the investment horizon of 90 days Crown Electrokinetics Corp is expected to under-perform the NewMarket. In addition to that, Crown Electrokinetics is 12.28 times more volatile than NewMarket. It trades about -0.28 of its total potential returns per unit of risk. NewMarket is currently generating about -0.08 per unit of volatility. If you would invest 51,057 in NewMarket on November 3, 2024 and sell it today you would lose (1,255) from holding NewMarket or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Electrokinetics Corp vs. NewMarket
Performance |
| Timeline |
| Crown Electrokinetics |
| NewMarket |
Crown Electrokinetics and NewMarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Electrokinetics and NewMarket
The main advantage of trading using opposite Crown Electrokinetics and NewMarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Electrokinetics position performs unexpectedly, NewMarket 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 NewMarket will offset losses from the drop in NewMarket's long position.| Crown Electrokinetics vs. Coroware | Crown Electrokinetics vs. Loop Industries | Crown Electrokinetics vs. Hudson Technologies | Crown Electrokinetics vs. General Environmental Management |
| NewMarket vs. H B Fuller | NewMarket vs. Minerals Technologies | NewMarket vs. Quaker Chemical | NewMarket vs. Oil Dri |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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