Correlation Between Lsb Industries and Solvay SA
Can any of the company-specific risk be diversified away by investing in both Lsb Industries and Solvay SA 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 Lsb Industries and Solvay SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsb Industries and Solvay SA, you can compare the effects of market volatilities on Lsb Industries and Solvay SA 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 Lsb Industries with a short position of Solvay SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsb Industries and Solvay SA.
Diversification Opportunities for Lsb Industries and Solvay SA
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lsb and Solvay is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries and Solvay SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay SA and Lsb Industries 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 Lsb Industries are associated (or correlated) with Solvay SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay SA has no effect on the direction of Lsb Industries i.e., Lsb Industries and Solvay SA go up and down completely randomly.
Pair Corralation between Lsb Industries and Solvay SA
Considering the 90-day investment horizon Lsb Industries is expected to generate 0.98 times more return on investment than Solvay SA. However, Lsb Industries is 1.02 times less risky than Solvay SA. It trades about 0.0 of its potential returns per unit of risk. Solvay SA is currently generating about -0.49 per unit of risk. If you would invest 878.00 in Lsb Industries on August 29, 2024 and sell it today you would lose (5.00) from holding Lsb Industries or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lsb Industries vs. Solvay SA
Performance |
| Timeline |
| Lsb Industries |
| Solvay SA |
Lsb Industries and Solvay SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsb Industries and Solvay SA
The main advantage of trading using opposite Lsb Industries and Solvay SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsb Industries position performs unexpectedly, Solvay SA 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 Solvay SA will offset losses from the drop in Solvay SA's long position.| Lsb Industries vs. Green Plains Renewable | Lsb Industries vs. AdvanSix | Lsb Industries vs. Tronox Holdings PLC | Lsb Industries vs. Methanex |
| Solvay SA vs. Origin Materials | Solvay SA vs. BASF SE NA | Solvay SA vs. Braskem SA Class | Solvay SA vs. Lsb Industries |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |