Correlation Between Origin Materials and Ecovyst
Can any of the company-specific risk be diversified away by investing in both Origin Materials and Ecovyst 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 Origin Materials and Ecovyst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Materials and Ecovyst, you can compare the effects of market volatilities on Origin Materials and Ecovyst 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 Origin Materials with a short position of Ecovyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Ecovyst.
Diversification Opportunities for Origin Materials and Ecovyst
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Origin and Ecovyst is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst and Origin Materials 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 Origin Materials are associated (or correlated) with Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of Origin Materials i.e., Origin Materials and Ecovyst go up and down completely randomly.
Pair Corralation between Origin Materials and Ecovyst
Given the investment horizon of 90 days Origin Materials is expected to generate 3.76 times more return on investment than Ecovyst. However, Origin Materials is 3.76 times more volatile than Ecovyst. It trades about 0.1 of its potential returns per unit of risk. Ecovyst is currently generating about 0.19 per unit of risk. If you would invest 99.00 in Origin Materials on October 21, 2024 and sell it today you would earn a total of 8.00 from holding Origin Materials or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Materials vs. Ecovyst
Performance |
| Timeline |
| Origin Materials |
| Ecovyst |
Origin Materials and Ecovyst Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Materials and Ecovyst
The main advantage of trading using opposite Origin Materials and Ecovyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials position performs unexpectedly, Ecovyst 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 Ecovyst will offset losses from the drop in Ecovyst's long position.| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
| Ecovyst vs. Orion Engineered Carbons | Ecovyst vs. Cabot | Ecovyst vs. Minerals Technologies | Ecovyst vs. Quaker Chemical |
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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