Correlation Between Oil Dri and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Oil Dri and Quaker Chemical 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 Oil Dri and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Dri and Quaker Chemical, you can compare the effects of market volatilities on Oil Dri and Quaker Chemical 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 Oil Dri with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Dri and Quaker Chemical.
Diversification Opportunities for Oil Dri and Quaker Chemical
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Oil and Quaker is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Oil Dri and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Oil Dri 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 Oil Dri are associated (or correlated) with Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Oil Dri i.e., Oil Dri and Quaker Chemical go up and down completely randomly.
Pair Corralation between Oil Dri and Quaker Chemical
Considering the 90-day investment horizon Oil Dri is expected to generate 1.25 times more return on investment than Quaker Chemical. However, Oil Dri is 1.25 times more volatile than Quaker Chemical. It trades about 0.05 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.01 per unit of risk. If you would invest 5,553 in Oil Dri on August 27, 2024 and sell it today you would earn a total of 1,508 from holding Oil Dri or generate 27.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Dri vs. Quaker Chemical
Performance |
| Timeline |
| Oil Dri |
| Quaker Chemical |
Oil Dri and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Dri and Quaker Chemical
The main advantage of trading using opposite Oil Dri and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Dri position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Oil Dri vs. Quaker Chemical | Oil Dri vs. Minerals Technologies | Oil Dri vs. Innospec | Oil Dri vs. H B Fuller |
| Quaker Chemical vs. Minerals Technologies | Quaker Chemical vs. Innospec | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Cabot |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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