Correlation Between Lotus Technology and Mativ Holdings
Can any of the company-specific risk be diversified away by investing in both Lotus Technology and Mativ Holdings 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 Lotus Technology and Mativ Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Technology American and Mativ Holdings, you can compare the effects of market volatilities on Lotus Technology and Mativ Holdings 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 Lotus Technology with a short position of Mativ Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Technology and Mativ Holdings.
Diversification Opportunities for Lotus Technology and Mativ Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotus and Mativ is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Technology American and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings and Lotus Technology 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 Lotus Technology American are associated (or correlated) with Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of Lotus Technology i.e., Lotus Technology and Mativ Holdings go up and down completely randomly.
Pair Corralation between Lotus Technology and Mativ Holdings
Considering the 90-day investment horizon Lotus Technology American is expected to generate 0.44 times more return on investment than Mativ Holdings. However, Lotus Technology American is 2.25 times less risky than Mativ Holdings. It trades about -0.1 of its potential returns per unit of risk. Mativ Holdings is currently generating about -0.1 per unit of risk. If you would invest 433.00 in Lotus Technology American on August 31, 2024 and sell it today you would lose (27.00) from holding Lotus Technology American or give up 6.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Technology American vs. Mativ Holdings
Performance |
| Timeline |
| Lotus Technology American |
| Mativ Holdings |
Lotus Technology and Mativ Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Technology and Mativ Holdings
The main advantage of trading using opposite Lotus Technology and Mativ Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Technology position performs unexpectedly, Mativ Holdings 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 Mativ Holdings will offset losses from the drop in Mativ Holdings' long position.| Lotus Technology vs. Seadrill Limited | Lotus Technology vs. Diageo PLC ADR | Lotus Technology vs. Transocean | Lotus Technology vs. Boston Beer |
| Mativ Holdings vs. Orion Engineered Carbons | Mativ Holdings vs. Select Energy Services | Mativ Holdings vs. Perimeter Solutions SA | Mativ Holdings vs. FutureFuel 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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