Correlation Between LyondellBasell Industries and Chiba Bank
Can any of the company-specific risk be diversified away by investing in both LyondellBasell Industries and Chiba Bank 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 LyondellBasell Industries and Chiba Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LyondellBasell Industries NV and Chiba Bank, you can compare the effects of market volatilities on LyondellBasell Industries and Chiba Bank 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 LyondellBasell Industries with a short position of Chiba Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of LyondellBasell Industries and Chiba Bank.
Diversification Opportunities for LyondellBasell Industries and Chiba Bank
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LyondellBasell and Chiba is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding LyondellBasell Industries NV and Chiba Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiba Bank and LyondellBasell Industries 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 LyondellBasell Industries NV are associated (or correlated) with Chiba Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiba Bank has no effect on the direction of LyondellBasell Industries i.e., LyondellBasell Industries and Chiba Bank go up and down completely randomly.
Pair Corralation between LyondellBasell Industries and Chiba Bank
Assuming the 90 days horizon LyondellBasell Industries NV is expected to under-perform the Chiba Bank. In addition to that, LyondellBasell Industries is 1.05 times more volatile than Chiba Bank. It trades about -0.02 of its total potential returns per unit of risk. Chiba Bank is currently generating about 0.21 per unit of volatility. If you would invest 670.00 in Chiba Bank on August 30, 2024 and sell it today you would earn a total of 65.00 from holding Chiba Bank or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LyondellBasell Industries NV vs. Chiba Bank
Performance |
| Timeline |
| LyondellBasell Industries |
| Chiba Bank |
LyondellBasell Industries and Chiba Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LyondellBasell Industries and Chiba Bank
The main advantage of trading using opposite LyondellBasell Industries and Chiba Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LyondellBasell Industries position performs unexpectedly, Chiba Bank 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 Chiba Bank will offset losses from the drop in Chiba Bank's long position.| LyondellBasell Industries vs. Linde plc | LyondellBasell Industries vs. Superior Plus Corp | LyondellBasell Industries vs. NMI Holdings | LyondellBasell Industries vs. SIVERS SEMICONDUCTORS AB |
| Chiba Bank vs. Apple Inc | Chiba Bank vs. Apple Inc | Chiba Bank vs. Superior Plus Corp | Chiba Bank vs. SIVERS SEMICONDUCTORS AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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