Correlation Between Innospec and Fuchs Petrolub
Can any of the company-specific risk be diversified away by investing in both Innospec and Fuchs Petrolub 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 Fuchs Petrolub into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innospec and Fuchs Petrolub SE, you can compare the effects of market volatilities on Innospec and Fuchs Petrolub 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 Fuchs Petrolub. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innospec and Fuchs Petrolub.
Diversification Opportunities for Innospec and Fuchs Petrolub
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innospec and Fuchs is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Innospec and Fuchs Petrolub SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuchs Petrolub SE 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 Fuchs Petrolub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuchs Petrolub SE has no effect on the direction of Innospec i.e., Innospec and Fuchs Petrolub go up and down completely randomly.
Pair Corralation between Innospec and Fuchs Petrolub
Given the investment horizon of 90 days Innospec is expected to under-perform the Fuchs Petrolub. But the stock apears to be less risky and, when comparing its historical volatility, Innospec is 1.33 times less risky than Fuchs Petrolub. The stock trades about -0.26 of its potential returns per unit of risk. The Fuchs Petrolub SE is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 1,204 in Fuchs Petrolub SE on September 12, 2024 and sell it today you would lose (60.00) from holding Fuchs Petrolub SE or give up 4.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Innospec vs. Fuchs Petrolub SE
Performance |
| Timeline |
| Innospec |
| Fuchs Petrolub SE |
Innospec and Fuchs Petrolub Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innospec and Fuchs Petrolub
The main advantage of trading using opposite Innospec and Fuchs Petrolub positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innospec position performs unexpectedly, Fuchs Petrolub 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 Fuchs Petrolub will offset losses from the drop in Fuchs Petrolub's long position.| Innospec vs. Minerals Technologies | Innospec vs. Oil Dri | Innospec vs. Quaker Chemical | Innospec vs. Sensient Technologies |
| Fuchs Petrolub vs. Chemours Co | Fuchs Petrolub vs. International Flavors Fragrances | Fuchs Petrolub vs. Air Products and | Fuchs Petrolub vs. PPG Industries |
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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