Correlation Between Quaker Chemical and Albemarle Corp
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and Albemarle Corp 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 Quaker Chemical and Albemarle Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Albemarle Corp, you can compare the effects of market volatilities on Quaker Chemical and Albemarle Corp 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 Quaker Chemical with a short position of Albemarle Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Albemarle Corp.
Diversification Opportunities for Quaker Chemical and Albemarle Corp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quaker and Albemarle is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Albemarle Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle Corp and Quaker Chemical 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 Quaker Chemical are associated (or correlated) with Albemarle Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle Corp has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Albemarle Corp go up and down completely randomly.
Pair Corralation between Quaker Chemical and Albemarle Corp
Considering the 90-day investment horizon Quaker Chemical is expected to under-perform the Albemarle Corp. But the stock apears to be less risky and, when comparing its historical volatility, Quaker Chemical is 1.92 times less risky than Albemarle Corp. The stock trades about -0.06 of its potential returns per unit of risk. The Albemarle Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 11,983 in Albemarle Corp on October 20, 2024 and sell it today you would lose (2,234) from holding Albemarle Corp or give up 18.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. Albemarle Corp
Performance |
| Timeline |
| Quaker Chemical |
| Albemarle Corp |
Quaker Chemical and Albemarle Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and Albemarle Corp
The main advantage of trading using opposite Quaker Chemical and Albemarle Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, Albemarle Corp 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 Albemarle Corp will offset losses from the drop in Albemarle Corp's long position.| Quaker Chemical vs. Minerals Technologies | Quaker Chemical vs. Innospec | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Cabot |
| Albemarle Corp vs. Linde plc Ordinary | Albemarle Corp vs. Air Products and | Albemarle Corp vs. Dupont De Nemours | Albemarle Corp vs. Sociedad Quimica y |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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