Correlation Between Element Solutions and Starco Brands
Can any of the company-specific risk be diversified away by investing in both Element Solutions and Starco Brands 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 Starco Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and Starco Brands, you can compare the effects of market volatilities on Element Solutions and Starco Brands 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 Starco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Starco Brands.
Diversification Opportunities for Element Solutions and Starco Brands
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Element and Starco is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and Starco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starco Brands 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 Starco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starco Brands has no effect on the direction of Element Solutions i.e., Element Solutions and Starco Brands go up and down completely randomly.
Pair Corralation between Element Solutions and Starco Brands
Considering the 90-day investment horizon Element Solutions is expected to generate 0.22 times more return on investment than Starco Brands. However, Element Solutions is 4.57 times less risky than Starco Brands. It trades about 0.08 of its potential returns per unit of risk. Starco Brands is currently generating about 0.02 per unit of risk. If you would invest 1,844 in Element Solutions on August 28, 2024 and sell it today you would earn a total of 1,089 from holding Element Solutions or generate 59.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Element Solutions vs. Starco Brands
Performance |
| Timeline |
| Element Solutions |
| Starco Brands |
Element Solutions and Starco Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and Starco Brands
The main advantage of trading using opposite Element Solutions and Starco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, Starco Brands 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 Starco Brands will offset losses from the drop in Starco Brands' long position.| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
| Starco Brands vs. Select Energy Services | Starco Brands vs. Orion Engineered Carbons | Starco Brands vs. Element Solutions | Starco Brands vs. Kronos Worldwide |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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