Correlation Between LyondellBasell Industries and Linde Plc
Can any of the company-specific risk be diversified away by investing in both LyondellBasell Industries and Linde Plc 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 LyondellBasell Industries and Linde Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LyondellBasell Industries NV and Linde plc Ordinary, you can compare the effects of market volatilities on LyondellBasell Industries and Linde Plc 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 LyondellBasell Industries with a short position of Linde Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of LyondellBasell Industries and Linde Plc.
Diversification Opportunities for LyondellBasell Industries and Linde Plc
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LyondellBasell and Linde is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding LyondellBasell Industries NV and Linde plc Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc Ordinary and LyondellBasell 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 LyondellBasell Industries NV are associated (or correlated) with Linde Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde plc Ordinary has no effect on the direction of LyondellBasell Industries i.e., LyondellBasell Industries and Linde Plc go up and down completely randomly.
Pair Corralation between LyondellBasell Industries and Linde Plc
Considering the 90-day investment horizon LyondellBasell Industries NV is expected to under-perform the Linde Plc. In addition to that, LyondellBasell Industries is 1.29 times more volatile than Linde plc Ordinary. It trades about -0.04 of its total potential returns per unit of risk. Linde plc Ordinary is currently generating about 0.05 per unit of volatility. If you would invest 39,644 in Linde plc Ordinary on October 20, 2024 and sell it today you would earn a total of 3,956 from holding Linde plc Ordinary or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LyondellBasell Industries NV vs. Linde plc Ordinary
Performance |
| Timeline |
| LyondellBasell Industries |
| Linde plc Ordinary |
LyondellBasell Industries and Linde Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LyondellBasell Industries and Linde Plc
The main advantage of trading using opposite LyondellBasell Industries and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LyondellBasell Industries position performs unexpectedly, Linde Plc 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 Linde Plc will offset losses from the drop in Linde Plc's long position.| LyondellBasell Industries vs. International Flavors Fragrances | LyondellBasell Industries vs. Cabot | LyondellBasell Industries vs. Westlake Chemical | LyondellBasell Industries vs. Air Products and |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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