Correlation Between Ecovyst and Novozymes
Can any of the company-specific risk be diversified away by investing in both Ecovyst and Novozymes 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 Novozymes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecovyst and Novozymes AS, you can compare the effects of market volatilities on Ecovyst and Novozymes 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 Novozymes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecovyst and Novozymes.
Diversification Opportunities for Ecovyst and Novozymes
Pay attention - limited upside
The 3 months correlation between Ecovyst and Novozymes is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and Novozymes AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novozymes AS 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 Novozymes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novozymes AS has no effect on the direction of Ecovyst i.e., Ecovyst and Novozymes go up and down completely randomly.
Pair Corralation between Ecovyst and Novozymes
Given the investment horizon of 90 days Ecovyst is expected to generate 1.88 times more return on investment than Novozymes. However, Ecovyst is 1.88 times more volatile than Novozymes AS. It trades about 0.14 of its potential returns per unit of risk. Novozymes AS is currently generating about -0.26 per unit of risk. If you would invest 693.00 in Ecovyst on August 28, 2024 and sell it today you would earn a total of 121.00 from holding Ecovyst or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecovyst vs. Novozymes AS
Performance |
| Timeline |
| Ecovyst |
| Novozymes AS |
Ecovyst and Novozymes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecovyst and Novozymes
The main advantage of trading using opposite Ecovyst and Novozymes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecovyst position performs unexpectedly, Novozymes 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 Novozymes will offset losses from the drop in Novozymes' long position.| Ecovyst vs. Orion Engineered Carbons | Ecovyst vs. Cabot | Ecovyst vs. Minerals Technologies | Ecovyst vs. Quaker Chemical |
| Novozymes vs. Air Liquide SA | Novozymes vs. PPG Industries | Novozymes vs. Sherwin Williams Co | Novozymes vs. Air Products and |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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