Correlation Between Olin and Livent Corp
Can any of the company-specific risk be diversified away by investing in both Olin and Livent Corp 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 Olin and Livent Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olin Corporation and Livent Corp, you can compare the effects of market volatilities on Olin and Livent Corp 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 Olin with a short position of Livent Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olin and Livent Corp.
Diversification Opportunities for Olin and Livent Corp
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Olin and Livent is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Olin Corp. and Livent Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livent Corp and Olin 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 Olin Corporation are associated (or correlated) with Livent Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livent Corp has no effect on the direction of Olin i.e., Olin and Livent Corp go up and down completely randomly.
Pair Corralation between Olin and Livent Corp
Considering the 90-day investment horizon Olin Corporation is expected to generate 0.85 times more return on investment than Livent Corp. However, Olin Corporation is 1.18 times less risky than Livent Corp. It trades about -0.01 of its potential returns per unit of risk. Livent Corp is currently generating about -0.05 per unit of risk. If you would invest 5,025 in Olin Corporation on September 1, 2024 and sell it today you would lose (766.00) from holding Olin Corporation or give up 15.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.33% |
| Values | Daily Returns |
Olin Corp. vs. Livent Corp
Performance |
| Timeline |
| Olin |
| Livent Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Olin and Livent Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olin and Livent Corp
The main advantage of trading using opposite Olin and Livent Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olin position performs unexpectedly, Livent Corp 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 Livent Corp will offset losses from the drop in Livent Corp's long position.| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
| Livent Corp vs. Albemarle Corp | Livent Corp vs. Linde plc Ordinary | Livent Corp vs. Air Products and | Livent Corp vs. Dupont De Nemours |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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