Correlation Between Quaker Chemical and H B
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and H B 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 H B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and H B Fuller, you can compare the effects of market volatilities on Quaker Chemical and H B 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 H B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and H B.
Diversification Opportunities for Quaker Chemical and H B
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Quaker and FUL is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller 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 H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and H B go up and down completely randomly.
Pair Corralation between Quaker Chemical and H B
Considering the 90-day investment horizon Quaker Chemical is expected to generate 1.6 times more return on investment than H B. However, Quaker Chemical is 1.6 times more volatile than H B Fuller. It trades about 0.01 of its potential returns per unit of risk. H B Fuller is currently generating about -0.1 per unit of risk. If you would invest 16,657 in Quaker Chemical on August 23, 2024 and sell it today you would lose (12.00) from holding Quaker Chemical or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. H B Fuller
Performance |
| Timeline |
| Quaker Chemical |
| H B Fuller |
Quaker Chemical and H B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and H B
The main advantage of trading using opposite Quaker Chemical and H B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, H B 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 H B will offset losses from the drop in H B's long position.| Quaker Chemical vs. Minerals Technologies | Quaker Chemical vs. Innospec | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Cabot |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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