Correlation Between Innospec and Evonik Industries
Can any of the company-specific risk be diversified away by investing in both Innospec and Evonik Industries 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 Innospec and Evonik Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innospec and Evonik Industries AG, you can compare the effects of market volatilities on Innospec and Evonik Industries 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 Innospec with a short position of Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innospec and Evonik Industries.
Diversification Opportunities for Innospec and Evonik Industries
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innospec and Evonik is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Innospec and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries and Innospec 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 Innospec are associated (or correlated) with Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of Innospec i.e., Innospec and Evonik Industries go up and down completely randomly.
Pair Corralation between Innospec and Evonik Industries
Given the investment horizon of 90 days Innospec is expected to generate 6.63 times less return on investment than Evonik Industries. But when comparing it to its historical volatility, Innospec is 4.38 times less risky than Evonik Industries. It trades about 0.03 of its potential returns per unit of risk. Evonik Industries AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,592 in Evonik Industries AG on September 4, 2024 and sell it today you would earn a total of 233.00 from holding Evonik Industries AG or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 66.06% |
| Values | Daily Returns |
Innospec vs. Evonik Industries AG
Performance |
| Timeline |
| Innospec |
| Evonik Industries |
Innospec and Evonik Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innospec and Evonik Industries
The main advantage of trading using opposite Innospec and Evonik Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innospec position performs unexpectedly, Evonik Industries 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 Evonik Industries will offset losses from the drop in Evonik Industries' long position.| Innospec vs. Minerals Technologies | Innospec vs. Oil Dri | Innospec vs. Quaker Chemical | Innospec vs. Sensient Technologies |
| Evonik Industries vs. Symrise Ag PK | Evonik Industries vs. Fuchs Petrolub SE | Evonik Industries vs. Innospec | Evonik Industries vs. Air Liquide SA |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |