Correlation Between Orion Engineered and Cabot
Can any of the company-specific risk be diversified away by investing in both Orion Engineered and Cabot 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 Orion Engineered and Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orion Engineered Carbons and Cabot, you can compare the effects of market volatilities on Orion Engineered and Cabot 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 Orion Engineered with a short position of Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Engineered and Cabot.
Diversification Opportunities for Orion Engineered and Cabot
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Orion and Cabot is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Orion Engineered Carbons and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot and Orion Engineered 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 Orion Engineered Carbons are associated (or correlated) with Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Orion Engineered i.e., Orion Engineered and Cabot go up and down completely randomly.
Pair Corralation between Orion Engineered and Cabot
Considering the 90-day investment horizon Orion Engineered Carbons is expected to under-perform the Cabot. In addition to that, Orion Engineered is 1.5 times more volatile than Cabot. It trades about -0.05 of its total potential returns per unit of risk. Cabot is currently generating about 0.04 per unit of volatility. If you would invest 10,003 in Cabot on August 24, 2024 and sell it today you would earn a total of 864.00 from holding Cabot or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orion Engineered Carbons vs. Cabot
Performance |
| Timeline |
| Orion Engineered Carbons |
| Cabot |
Orion Engineered and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orion Engineered and Cabot
The main advantage of trading using opposite Orion Engineered and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Engineered position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| Orion Engineered vs. Innospec | Orion Engineered vs. H B Fuller | Orion Engineered vs. Quaker Chemical | Orion Engineered vs. Minerals Technologies |
| Cabot vs. Eastman Chemical | Cabot vs. Olin Corporation | Cabot vs. LyondellBasell Industries NV | Cabot vs. Air Products and |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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