Correlation Between Element Solutions and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Element Solutions and Quaker Chemical 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 Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and Quaker Chemical, you can compare the effects of market volatilities on Element Solutions and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Quaker Chemical.
Diversification Opportunities for Element Solutions and Quaker Chemical
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Element and Quaker is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Element Solutions i.e., Element Solutions and Quaker Chemical go up and down completely randomly.
Pair Corralation between Element Solutions and Quaker Chemical
Considering the 90-day investment horizon Element Solutions is expected to generate 1.06 times more return on investment than Quaker Chemical. However, Element Solutions is 1.06 times more volatile than Quaker Chemical. It trades about 0.07 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.02 per unit of risk. If you would invest 2,392 in Element Solutions on August 24, 2024 and sell it today you would earn a total of 464.00 from holding Element Solutions or generate 19.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. Quaker Chemical
Performance |
| Timeline |
| Element Solutions |
| Quaker Chemical |
Element Solutions and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and Quaker Chemical
The main advantage of trading using opposite Element Solutions and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
| Quaker Chemical vs. Minerals Technologies | Quaker Chemical vs. Innospec | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Cabot |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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