Correlation Between NewMarket and General Environmental
Can any of the company-specific risk be diversified away by investing in both NewMarket and General Environmental 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 NewMarket and General Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewMarket and General Environmental Management, you can compare the effects of market volatilities on NewMarket and General Environmental 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 NewMarket with a short position of General Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewMarket and General Environmental.
Diversification Opportunities for NewMarket and General Environmental
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NewMarket and General is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NewMarket and General Environmental Manageme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Environmental and NewMarket 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 NewMarket are associated (or correlated) with General Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Environmental has no effect on the direction of NewMarket i.e., NewMarket and General Environmental go up and down completely randomly.
Pair Corralation between NewMarket and General Environmental
Considering the 90-day investment horizon NewMarket is expected to generate 33.87 times less return on investment than General Environmental. But when comparing it to its historical volatility, NewMarket is 3.49 times less risky than General Environmental. It trades about 0.01 of its potential returns per unit of risk. General Environmental Management is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 63.00 in General Environmental Management on September 1, 2024 and sell it today you would earn a total of 18.00 from holding General Environmental Management or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
NewMarket vs. General Environmental Manageme
Performance |
| Timeline |
| NewMarket |
| General Environmental |
NewMarket and General Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewMarket and General Environmental
The main advantage of trading using opposite NewMarket and General Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewMarket position performs unexpectedly, General Environmental 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 General Environmental will offset losses from the drop in General Environmental's long position.| NewMarket vs. Linde plc Ordinary | NewMarket vs. Air Products and | NewMarket vs. Aquagold International | NewMarket vs. Thrivent High Yield |
| General Environmental vs. Element Solutions | General Environmental vs. Orion Engineered Carbons | General Environmental vs. Minerals Technologies | General Environmental vs. Ingevity 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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