Correlation Between Orion Engineered and NewMarket
Can any of the company-specific risk be diversified away by investing in both Orion Engineered and NewMarket 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 NewMarket 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 NewMarket, you can compare the effects of market volatilities on Orion Engineered and NewMarket 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 NewMarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Engineered and NewMarket.
Diversification Opportunities for Orion Engineered and NewMarket
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Orion and NewMarket is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Orion Engineered Carbons and NewMarket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMarket 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 NewMarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMarket has no effect on the direction of Orion Engineered i.e., Orion Engineered and NewMarket go up and down completely randomly.
Pair Corralation between Orion Engineered and NewMarket
Considering the 90-day investment horizon Orion Engineered is expected to generate 4.3 times less return on investment than NewMarket. In addition to that, Orion Engineered is 1.76 times more volatile than NewMarket. It trades about 0.01 of its total potential returns per unit of risk. NewMarket is currently generating about 0.09 per unit of volatility. If you would invest 30,660 in NewMarket on August 24, 2024 and sell it today you would earn a total of 23,605 from holding NewMarket or generate 76.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orion Engineered Carbons vs. NewMarket
Performance |
| Timeline |
| Orion Engineered Carbons |
| NewMarket |
Orion Engineered and NewMarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orion Engineered and NewMarket
The main advantage of trading using opposite Orion Engineered and NewMarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Engineered position performs unexpectedly, NewMarket 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 NewMarket will offset losses from the drop in NewMarket's long position.| Orion Engineered vs. Eshallgo Class A | Orion Engineered vs. Amtech Systems | Orion Engineered vs. Gold Fields Ltd | Orion Engineered vs. Aegean Airlines SA |
| NewMarket vs. Eshallgo Class A | NewMarket vs. Amtech Systems | NewMarket vs. Gold Fields Ltd | NewMarket vs. Aegean Airlines SA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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