Correlation Between Fuchs Petrolub and Innospec
Can any of the company-specific risk be diversified away by investing in both Fuchs Petrolub 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 Fuchs Petrolub and Innospec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuchs Petrolub SE and Innospec, you can compare the effects of market volatilities on Fuchs Petrolub 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 Fuchs Petrolub with a short position of Innospec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuchs Petrolub and Innospec.
Diversification Opportunities for Fuchs Petrolub and Innospec
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fuchs and Innospec is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fuchs Petrolub SE and Innospec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innospec and Fuchs Petrolub 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 Fuchs Petrolub SE 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 Fuchs Petrolub i.e., Fuchs Petrolub and Innospec go up and down completely randomly.
Pair Corralation between Fuchs Petrolub and Innospec
Assuming the 90 days horizon Fuchs Petrolub SE is expected to under-perform the Innospec. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fuchs Petrolub SE is 1.96 times less risky than Innospec. The pink sheet trades about -0.27 of its potential returns per unit of risk. The Innospec is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 10,819 in Innospec on September 4, 2024 and sell it today you would earn a total of 1,126 from holding Innospec or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fuchs Petrolub SE vs. Innospec
Performance |
| Timeline |
| Fuchs Petrolub SE |
| Innospec |
Fuchs Petrolub and Innospec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuchs Petrolub and Innospec
The main advantage of trading using opposite Fuchs Petrolub and Innospec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuchs Petrolub 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.| Fuchs Petrolub vs. Covestro ADR | Fuchs Petrolub vs. Fresenius SE Co | Fuchs Petrolub vs. Secom Co Ltd | Fuchs Petrolub vs. Alfa Laval AB |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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