Correlation Between Mativ Holdings and Timken
Can any of the company-specific risk be diversified away by investing in both Mativ Holdings and Timken 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 Timken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mativ Holdings and Timken Company, you can compare the effects of market volatilities on Mativ Holdings and Timken 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 Timken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mativ Holdings and Timken.
Diversification Opportunities for Mativ Holdings and Timken
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mativ and Timken is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company 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 Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of Mativ Holdings i.e., Mativ Holdings and Timken go up and down completely randomly.
Pair Corralation between Mativ Holdings and Timken
Given the investment horizon of 90 days Mativ Holdings is expected to under-perform the Timken. In addition to that, Mativ Holdings is 1.54 times more volatile than Timken Company. It trades about -0.1 of its total potential returns per unit of risk. Timken Company is currently generating about -0.07 per unit of volatility. If you would invest 8,277 in Timken Company on September 2, 2024 and sell it today you would lose (532.00) from holding Timken Company or give up 6.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mativ Holdings vs. Timken Company
Performance |
| Timeline |
| Mativ Holdings |
| Timken Company |
Mativ Holdings and Timken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mativ Holdings and Timken
The main advantage of trading using opposite Mativ Holdings and Timken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mativ Holdings position performs unexpectedly, Timken 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 Timken will offset losses from the drop in Timken'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 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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