Correlation Between Ecovyst and Cabot
Can any of the company-specific risk be diversified away by investing in both Ecovyst and Cabot 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 Ecovyst and Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecovyst and Cabot, you can compare the effects of market volatilities on Ecovyst and Cabot 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 Ecovyst with a short position of Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecovyst and Cabot.
Diversification Opportunities for Ecovyst and Cabot
Modest diversification
The 3 months correlation between Ecovyst and Cabot is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot and Ecovyst 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 Ecovyst are associated (or correlated) with Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Ecovyst i.e., Ecovyst and Cabot go up and down completely randomly.
Pair Corralation between Ecovyst and Cabot
Given the investment horizon of 90 days Ecovyst is expected to generate 1.67 times more return on investment than Cabot. However, Ecovyst is 1.67 times more volatile than Cabot. It trades about 0.36 of its potential returns per unit of risk. Cabot is currently generating about 0.01 per unit of risk. If you would invest 634.00 in Ecovyst on August 27, 2024 and sell it today you would earn a total of 185.00 from holding Ecovyst or generate 29.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecovyst vs. Cabot
Performance |
| Timeline |
| Ecovyst |
| Cabot |
Ecovyst and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecovyst and Cabot
The main advantage of trading using opposite Ecovyst and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecovyst position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| Ecovyst vs. Orion Engineered Carbons | Ecovyst vs. Cabot | Ecovyst vs. Minerals Technologies | Ecovyst vs. Quaker Chemical |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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