Correlation Between FutureFuel Corp and Avient Corp
Can any of the company-specific risk be diversified away by investing in both FutureFuel Corp and Avient Corp 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 FutureFuel Corp and Avient Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FutureFuel Corp and Avient Corp, you can compare the effects of market volatilities on FutureFuel Corp and Avient Corp 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 FutureFuel Corp with a short position of Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FutureFuel Corp and Avient Corp.
Diversification Opportunities for FutureFuel Corp and Avient Corp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FutureFuel and Avient is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp and FutureFuel Corp 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 FutureFuel Corp are associated (or correlated) with Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of FutureFuel Corp i.e., FutureFuel Corp and Avient Corp go up and down completely randomly.
Pair Corralation between FutureFuel Corp and Avient Corp
Allowing for the 90-day total investment horizon FutureFuel Corp is expected to generate 0.84 times more return on investment than Avient Corp. However, FutureFuel Corp is 1.19 times less risky than Avient Corp. It trades about 0.11 of its potential returns per unit of risk. Avient Corp is currently generating about -0.32 per unit of risk. If you would invest 513.00 in FutureFuel Corp on September 18, 2024 and sell it today you would earn a total of 13.00 from holding FutureFuel Corp or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FutureFuel Corp vs. Avient Corp
Performance |
| Timeline |
| FutureFuel Corp |
| Avient Corp |
FutureFuel Corp and Avient Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FutureFuel Corp and Avient Corp
The main advantage of trading using opposite FutureFuel Corp and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureFuel Corp position performs unexpectedly, Avient Corp 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 Avient Corp will offset losses from the drop in Avient Corp's long position.| FutureFuel Corp vs. LyondellBasell Industries NV | FutureFuel Corp vs. Cabot | FutureFuel Corp vs. Westlake Chemical | FutureFuel Corp vs. Air Products and |
| Avient Corp vs. Axalta Coating Systems | Avient Corp vs. H B Fuller | Avient Corp vs. Quaker Chemical | Avient Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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