Correlation Between Orion Engineered and REX American
Can any of the company-specific risk be diversified away by investing in both Orion Engineered and REX American 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 REX American 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 REX American Resources, you can compare the effects of market volatilities on Orion Engineered and REX American 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 REX American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Engineered and REX American.
Diversification Opportunities for Orion Engineered and REX American
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Orion and REX is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Orion Engineered Carbons and REX American Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX American Resources 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 REX American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX American Resources has no effect on the direction of Orion Engineered i.e., Orion Engineered and REX American go up and down completely randomly.
Pair Corralation between Orion Engineered and REX American
Considering the 90-day investment horizon Orion Engineered is expected to generate 3.15 times less return on investment than REX American. But when comparing it to its historical volatility, Orion Engineered Carbons is 1.17 times less risky than REX American. It trades about 0.02 of its potential returns per unit of risk. REX American Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,860 in REX American Resources on August 28, 2024 and sell it today you would earn a total of 1,603 from holding REX American Resources or generate 56.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orion Engineered Carbons vs. REX American Resources
Performance |
| Timeline |
| Orion Engineered Carbons |
| REX American Resources |
Orion Engineered and REX American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orion Engineered and REX American
The main advantage of trading using opposite Orion Engineered and REX American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Engineered position performs unexpectedly, REX American 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 REX American will offset losses from the drop in REX American's long position.| Orion Engineered vs. Quaker Chemical | Orion Engineered vs. Minerals Technologies | Orion Engineered vs. Innospec | Orion Engineered vs. H B Fuller |
| REX American vs. Lsb Industries | REX American vs. AdvanSix | REX American vs. Tronox Holdings PLC | REX American vs. Methanex |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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