Correlation Between Evonik Industries and Innospec
Can any of the company-specific risk be diversified away by investing in both Evonik Industries and Innospec 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 Evonik Industries and Innospec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evonik Industries AG and Innospec, you can compare the effects of market volatilities on Evonik Industries and Innospec 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 Evonik Industries with a short position of Innospec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evonik Industries and Innospec.
Diversification Opportunities for Evonik Industries and Innospec
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Evonik and Innospec is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Evonik Industries AG and Innospec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innospec and Evonik Industries 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 Evonik Industries AG are associated (or correlated) with Innospec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innospec has no effect on the direction of Evonik Industries i.e., Evonik Industries and Innospec go up and down completely randomly.
Pair Corralation between Evonik Industries and Innospec
Assuming the 90 days horizon Evonik Industries AG is expected to under-perform the Innospec. In addition to that, Evonik Industries is 1.12 times more volatile than Innospec. It trades about -0.08 of its total potential returns per unit of risk. Innospec is currently generating about 0.09 per unit of volatility. If you would invest 10,584 in Innospec on September 12, 2024 and sell it today you would earn a total of 1,088 from holding Innospec or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evonik Industries AG vs. Innospec
Performance |
| Timeline |
| Evonik Industries |
| Innospec |
Evonik Industries and Innospec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evonik Industries and Innospec
The main advantage of trading using opposite Evonik Industries and Innospec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evonik Industries position performs unexpectedly, Innospec 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 Innospec will offset losses from the drop in Innospec's long position.| Evonik Industries vs. Symrise Ag PK | Evonik Industries vs. Fuchs Petrolub SE | Evonik Industries vs. Innospec | Evonik Industries vs. Air Liquide SA |
| Innospec vs. Minerals Technologies | Innospec vs. Oil Dri | Innospec vs. Quaker Chemical | Innospec vs. Sensient Technologies |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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