Correlation Between H B and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both H B and Axalta Coating 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 H B and Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H B Fuller and Axalta Coating Systems, you can compare the effects of market volatilities on H B and Axalta Coating 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 H B with a short position of Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and Axalta Coating.
Diversification Opportunities for H B and Axalta Coating
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FUL and Axalta is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems and H B 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 H B Fuller are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of H B i.e., H B and Axalta Coating go up and down completely randomly.
Pair Corralation between H B and Axalta Coating
Considering the 90-day investment horizon H B Fuller is expected to under-perform the Axalta Coating. But the stock apears to be less risky and, when comparing its historical volatility, H B Fuller is 1.04 times less risky than Axalta Coating. The stock trades about -0.01 of its potential returns per unit of risk. The Axalta Coating Systems is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,484 in Axalta Coating Systems on August 24, 2024 and sell it today you would earn a total of 495.00 from holding Axalta Coating Systems or generate 14.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
H B Fuller vs. Axalta Coating Systems
Performance |
| Timeline |
| H B Fuller |
| Axalta Coating Systems |
H B and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H B and Axalta Coating
The main advantage of trading using opposite H B and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H B position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.The idea behind H B Fuller and Axalta Coating Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Axalta Coating vs. Eastman Chemical | Axalta Coating vs. Olin Corporation | Axalta Coating vs. LyondellBasell Industries NV | Axalta Coating vs. Air Products and |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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