Correlation Between Danimer Scientific and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Danimer Scientific and Element Solutions 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 Danimer Scientific and Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danimer Scientific and Element Solutions, you can compare the effects of market volatilities on Danimer Scientific and Element Solutions 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 Danimer Scientific with a short position of Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danimer Scientific and Element Solutions.
Diversification Opportunities for Danimer Scientific and Element Solutions
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Danimer and Element is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Danimer Scientific and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions and Danimer Scientific 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 Danimer Scientific are associated (or correlated) with Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Danimer Scientific i.e., Danimer Scientific and Element Solutions go up and down completely randomly.
Pair Corralation between Danimer Scientific and Element Solutions
Given the investment horizon of 90 days Danimer Scientific is expected to under-perform the Element Solutions. In addition to that, Danimer Scientific is 3.84 times more volatile than Element Solutions. It trades about -0.09 of its total potential returns per unit of risk. Element Solutions is currently generating about 0.08 per unit of volatility. If you would invest 2,104 in Element Solutions on August 27, 2024 and sell it today you would earn a total of 800.00 from holding Element Solutions or generate 38.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danimer Scientific vs. Element Solutions
Performance |
| Timeline |
| Danimer Scientific |
| Element Solutions |
Danimer Scientific and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danimer Scientific and Element Solutions
The main advantage of trading using opposite Danimer Scientific and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danimer Scientific position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Danimer Scientific vs. Minerals Technologies | Danimer Scientific vs. Oil Dri | Danimer Scientific vs. H B Fuller | Danimer Scientific vs. Northern Technologies |
| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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