Correlation Between Element Solutions and Ashland Global
Can any of the company-specific risk be diversified away by investing in both Element Solutions and Ashland Global 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 Element Solutions and Ashland Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and Ashland Global Holdings, you can compare the effects of market volatilities on Element Solutions and Ashland Global 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 Element Solutions with a short position of Ashland Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Ashland Global.
Diversification Opportunities for Element Solutions and Ashland Global
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Element and Ashland is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and Ashland Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashland Global Holdings and Element Solutions 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 Element Solutions are associated (or correlated) with Ashland Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashland Global Holdings has no effect on the direction of Element Solutions i.e., Element Solutions and Ashland Global go up and down completely randomly.
Pair Corralation between Element Solutions and Ashland Global
Considering the 90-day investment horizon Element Solutions is expected to generate 1.07 times more return on investment than Ashland Global. However, Element Solutions is 1.07 times more volatile than Ashland Global Holdings. It trades about 0.06 of its potential returns per unit of risk. Ashland Global Holdings is currently generating about -0.03 per unit of risk. If you would invest 1,867 in Element Solutions on August 27, 2024 and sell it today you would earn a total of 1,037 from holding Element Solutions or generate 55.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. Ashland Global Holdings
Performance |
| Timeline |
| Element Solutions |
| Ashland Global Holdings |
Element Solutions and Ashland Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and Ashland Global
The main advantage of trading using opposite Element Solutions and Ashland Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, Ashland Global 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 Ashland Global will offset losses from the drop in Ashland Global's long position.| Element Solutions vs. Oil Dri | Element Solutions vs. H B Fuller | Element Solutions vs. Northern Technologies | Element Solutions vs. Cabot |
| Ashland Global vs. H B Fuller | Ashland Global vs. Element Solutions | Ashland Global vs. Balchem | Ashland Global vs. Avantor |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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