Correlation Between Livent Corp and Olin
Can any of the company-specific risk be diversified away by investing in both Livent Corp and Olin 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 Livent Corp and Olin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livent Corp and Olin Corporation, you can compare the effects of market volatilities on Livent Corp and Olin 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 Livent Corp with a short position of Olin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livent Corp and Olin.
Diversification Opportunities for Livent Corp and Olin
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Livent and Olin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Livent Corp and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin and Livent Corp 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 Livent Corp are associated (or correlated) with Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of Livent Corp i.e., Livent Corp and Olin go up and down completely randomly.
Pair Corralation between Livent Corp and Olin
Given the investment horizon of 90 days Livent Corp is expected to under-perform the Olin. In addition to that, Livent Corp is 1.18 times more volatile than Olin Corporation. It trades about -0.05 of its total potential returns per unit of risk. Olin Corporation is currently generating about -0.01 per unit of volatility. If you would invest 5,025 in Olin Corporation on September 1, 2024 and sell it today you would lose (766.00) from holding Olin Corporation or give up 15.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.33% |
| Values | Daily Returns |
Livent Corp vs. Olin Corp.
Performance |
| Timeline |
| Livent Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Olin |
Livent Corp and Olin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livent Corp and Olin
The main advantage of trading using opposite Livent Corp and Olin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livent Corp position performs unexpectedly, Olin 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 Olin will offset losses from the drop in Olin's long position.| Livent Corp vs. Albemarle Corp | Livent Corp vs. Linde plc Ordinary | Livent Corp vs. Air Products and | Livent Corp vs. Dupont De Nemours |
| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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