Correlation Between Origin Materials and Lsb Industries
Can any of the company-specific risk be diversified away by investing in both Origin Materials and Lsb Industries 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 Lsb Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Materials and Lsb Industries, you can compare the effects of market volatilities on Origin Materials and Lsb Industries 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 Lsb Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Lsb Industries.
Diversification Opportunities for Origin Materials and Lsb Industries
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Origin and Lsb is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and Lsb Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsb Industries 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 Lsb Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsb Industries has no effect on the direction of Origin Materials i.e., Origin Materials and Lsb Industries go up and down completely randomly.
Pair Corralation between Origin Materials and Lsb Industries
Given the investment horizon of 90 days Origin Materials is expected to under-perform the Lsb Industries. In addition to that, Origin Materials is 2.02 times more volatile than Lsb Industries. It trades about -0.11 of its total potential returns per unit of risk. Lsb Industries is currently generating about 0.05 per unit of volatility. If you would invest 878.00 in Lsb Industries on August 28, 2024 and sell it today you would earn a total of 16.00 from holding Lsb Industries or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Materials vs. Lsb Industries
Performance |
| Timeline |
| Origin Materials |
| Lsb Industries |
Origin Materials and Lsb Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Materials and Lsb Industries
The main advantage of trading using opposite Origin Materials and Lsb Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials position performs unexpectedly, Lsb Industries 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 Lsb Industries will offset losses from the drop in Lsb Industries' long position.| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
| Lsb Industries vs. Valhi Inc | Lsb Industries vs. Westlake Chemical Partners | Lsb Industries vs. Braskem SA Class | Lsb Industries vs. Dow Inc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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