Correlation Between E I and A Schulman
Can any of the company-specific risk be diversified away by investing in both E I and A Schulman 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 E I and A Schulman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E I du and A Schulman, you can compare the effects of market volatilities on E I and A Schulman 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 E I with a short position of A Schulman. Check out your portfolio center. Please also check ongoing floating volatility patterns of E I and A Schulman.
Diversification Opportunities for E I and A Schulman
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CTA-PB and SLMNP is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding E I du and A Schulman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Schulman and E I 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 E I du are associated (or correlated) with A Schulman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Schulman has no effect on the direction of E I i.e., E I and A Schulman go up and down completely randomly.
Pair Corralation between E I and A Schulman
Assuming the 90 days trading horizon E I is expected to generate 3.17 times less return on investment than A Schulman. But when comparing it to its historical volatility, E I du is 2.42 times less risky than A Schulman. It trades about 0.04 of its potential returns per unit of risk. A Schulman is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 82,661 in A Schulman on September 1, 2024 and sell it today you would earn a total of 10,839 from holding A Schulman or generate 13.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E I du vs. A Schulman
Performance |
| Timeline |
| E I du |
| A Schulman |
E I and A Schulman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E I and A Schulman
The main advantage of trading using opposite E I and A Schulman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E I position performs unexpectedly, A Schulman 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 A Schulman will offset losses from the drop in A Schulman's long position.The idea behind E I du and A Schulman pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| A Schulman vs. BASF SE NA | A Schulman vs. Braskem SA Class | A Schulman vs. Lsb Industries | A Schulman vs. Dow Inc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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