Correlation Between Mativ Holdings and Small Cap
Can any of the company-specific risk be diversified away by investing in both Mativ Holdings and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mativ Holdings and Small Cap Premium, you can compare the effects of market volatilities on Mativ Holdings and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mativ Holdings and Small Cap.
Diversification Opportunities for Mativ Holdings and Small Cap
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mativ and Small is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and Small Cap Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Premium 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Premium has no effect on the direction of Mativ Holdings i.e., Mativ Holdings and Small Cap go up and down completely randomly.
Pair Corralation between Mativ Holdings and Small Cap
Given the investment horizon of 90 days Mativ Holdings is expected to under-perform the Small Cap. In addition to that, Mativ Holdings is 7.46 times more volatile than Small Cap Premium. It trades about -0.11 of its total potential returns per unit of risk. Small Cap Premium is currently generating about 0.05 per unit of volatility. If you would invest 2,407 in Small Cap Premium on August 31, 2024 and sell it today you would earn a total of 39.00 from holding Small Cap Premium or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mativ Holdings vs. Small Cap Premium
Performance |
| Timeline |
| Mativ Holdings |
| Small Cap Premium |
Mativ Holdings and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mativ Holdings and Small Cap
The main advantage of trading using opposite Mativ Holdings and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mativ Holdings position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap'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 |
| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. First Trust Enhanced | Small Cap vs. Voya Global Advantage |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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