Correlation Between Element Solutions and 5E Advanced
Can any of the company-specific risk be diversified away by investing in both Element Solutions and 5E Advanced 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 5E Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and 5E Advanced Materials, you can compare the effects of market volatilities on Element Solutions and 5E Advanced 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 5E Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and 5E Advanced.
Diversification Opportunities for Element Solutions and 5E Advanced
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Element and FEAM is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and 5E Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5E Advanced Materials 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 5E Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5E Advanced Materials has no effect on the direction of Element Solutions i.e., Element Solutions and 5E Advanced go up and down completely randomly.
Pair Corralation between Element Solutions and 5E Advanced
Considering the 90-day investment horizon Element Solutions is expected to generate 0.38 times more return on investment than 5E Advanced. However, Element Solutions is 2.66 times less risky than 5E Advanced. It trades about 0.27 of its potential returns per unit of risk. 5E Advanced Materials is currently generating about -0.02 per unit of risk. If you would invest 2,667 in Element Solutions on August 27, 2024 and sell it today you would earn a total of 237.00 from holding Element Solutions or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. 5E Advanced Materials
Performance |
| Timeline |
| Element Solutions |
| 5E Advanced Materials |
Element Solutions and 5E Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and 5E Advanced
The main advantage of trading using opposite Element Solutions and 5E Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, 5E Advanced 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 5E Advanced will offset losses from the drop in 5E Advanced's long position.| Element Solutions vs. Oil Dri | Element Solutions vs. H B Fuller | Element Solutions vs. Northern Technologies | Element Solutions vs. Cabot |
| 5E Advanced vs. Innospec | 5E Advanced vs. Minerals Technologies | 5E Advanced vs. Oil Dri | 5E Advanced 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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