Correlation Between Mativ Holdings and Orica
Can any of the company-specific risk be diversified away by investing in both Mativ Holdings and Orica 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 Mativ Holdings and Orica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mativ Holdings and Orica Ltd ADR, you can compare the effects of market volatilities on Mativ Holdings and Orica 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 Mativ Holdings with a short position of Orica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mativ Holdings and Orica.
Diversification Opportunities for Mativ Holdings and Orica
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mativ and Orica is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and Orica Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orica Ltd ADR and Mativ Holdings 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 Mativ Holdings are associated (or correlated) with Orica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orica Ltd ADR has no effect on the direction of Mativ Holdings i.e., Mativ Holdings and Orica go up and down completely randomly.
Pair Corralation between Mativ Holdings and Orica
Given the investment horizon of 90 days Mativ Holdings is expected to generate 1.45 times less return on investment than Orica. In addition to that, Mativ Holdings is 1.73 times more volatile than Orica Ltd ADR. It trades about 0.01 of its total potential returns per unit of risk. Orica Ltd ADR is currently generating about 0.02 per unit of volatility. If you would invest 1,078 in Orica Ltd ADR on August 30, 2024 and sell it today you would earn a total of 103.00 from holding Orica Ltd ADR or generate 9.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.03% |
| Values | Daily Returns |
Mativ Holdings vs. Orica Ltd ADR
Performance |
| Timeline |
| Mativ Holdings |
| Orica Ltd ADR |
Mativ Holdings and Orica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mativ Holdings and Orica
The main advantage of trading using opposite Mativ Holdings and Orica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mativ Holdings position performs unexpectedly, Orica 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 Orica will offset losses from the drop in Orica's long position.| Mativ Holdings vs. Orion Engineered Carbons | Mativ Holdings vs. Select Energy Services | Mativ Holdings vs. Perimeter Solutions SA | Mativ Holdings vs. FutureFuel Corp |
| Orica vs. Green Star Products | Orica vs. Greystone Logistics | Orica vs. Iofina plc | Orica vs. Crown Electrokinetics 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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