Correlation Between Innospec and Greystone Logistics
Can any of the company-specific risk be diversified away by investing in both Innospec and Greystone Logistics 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 Greystone Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innospec and Greystone Logistics, you can compare the effects of market volatilities on Innospec and Greystone Logistics 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 Greystone Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innospec and Greystone Logistics.
Diversification Opportunities for Innospec and Greystone Logistics
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innospec and Greystone is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Innospec and Greystone Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greystone Logistics 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 Greystone Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greystone Logistics has no effect on the direction of Innospec i.e., Innospec and Greystone Logistics go up and down completely randomly.
Pair Corralation between Innospec and Greystone Logistics
Given the investment horizon of 90 days Innospec is expected to generate 0.74 times more return on investment than Greystone Logistics. However, Innospec is 1.35 times less risky than Greystone Logistics. It trades about 0.15 of its potential returns per unit of risk. Greystone Logistics is currently generating about -0.1 per unit of risk. If you would invest 10,929 in Innospec on August 28, 2024 and sell it today you would earn a total of 1,066 from holding Innospec or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innospec vs. Greystone Logistics
Performance |
| Timeline |
| Innospec |
| Greystone Logistics |
Innospec and Greystone Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innospec and Greystone Logistics
The main advantage of trading using opposite Innospec and Greystone Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innospec position performs unexpectedly, Greystone Logistics 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 Greystone Logistics will offset losses from the drop in Greystone Logistics' long position.| Innospec vs. Minerals Technologies | Innospec vs. Oil Dri | Innospec vs. Quaker Chemical | Innospec vs. Sensient Technologies |
| Greystone Logistics vs. Ascendant Resources | Greystone Logistics vs. Cantex Mine Development | Greystone Logistics vs. Amarc Resources | Greystone Logistics vs. Sterling Metals Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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