Correlation Between Linde Plc and Cabot
Can any of the company-specific risk be diversified away by investing in both Linde Plc and Cabot 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 Linde Plc and Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linde plc Ordinary and Cabot, you can compare the effects of market volatilities on Linde Plc and Cabot 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 Linde Plc with a short position of Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde Plc and Cabot.
Diversification Opportunities for Linde Plc and Cabot
Modest diversification
The 3 months correlation between Linde and Cabot is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc Ordinary and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot and Linde Plc 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 Linde plc Ordinary are associated (or correlated) with Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Linde Plc i.e., Linde Plc and Cabot go up and down completely randomly.
Pair Corralation between Linde Plc and Cabot
Considering the 90-day investment horizon Linde Plc is expected to generate 1.53 times less return on investment than Cabot. But when comparing it to its historical volatility, Linde plc Ordinary is 1.78 times less risky than Cabot. It trades about 0.07 of its potential returns per unit of risk. Cabot is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,900 in Cabot on August 27, 2024 and sell it today you would earn a total of 4,136 from holding Cabot or generate 59.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linde plc Ordinary vs. Cabot
Performance |
| Timeline |
| Linde plc Ordinary |
| Cabot |
Linde Plc and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linde Plc and Cabot
The main advantage of trading using opposite Linde Plc and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde Plc position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| Linde Plc vs. PPG Industries | Linde Plc vs. Ecolab Inc | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. LyondellBasell Industries NV |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |