Correlation Between Quaker Chemical and Commercial Vehicle
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and Commercial Vehicle 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 Quaker Chemical and Commercial Vehicle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Commercial Vehicle Group, you can compare the effects of market volatilities on Quaker Chemical and Commercial Vehicle 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 Quaker Chemical with a short position of Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Commercial Vehicle.
Diversification Opportunities for Quaker Chemical and Commercial Vehicle
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Quaker and Commercial is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle and Quaker Chemical 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 Quaker Chemical are associated (or correlated) with Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Commercial Vehicle go up and down completely randomly.
Pair Corralation between Quaker Chemical and Commercial Vehicle
Assuming the 90 days horizon Quaker Chemical is expected to generate 0.96 times more return on investment than Commercial Vehicle. However, Quaker Chemical is 1.04 times less risky than Commercial Vehicle. It trades about 0.07 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.2 per unit of risk. If you would invest 14,000 in Quaker Chemical on September 1, 2024 and sell it today you would earn a total of 600.00 from holding Quaker Chemical or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. Commercial Vehicle Group
Performance |
| Timeline |
| Quaker Chemical |
| Commercial Vehicle |
Quaker Chemical and Commercial Vehicle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and Commercial Vehicle
The main advantage of trading using opposite Quaker Chemical and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.| Quaker Chemical vs. Transport International Holdings | Quaker Chemical vs. TSOGO SUN GAMING | Quaker Chemical vs. Air Transport Services | Quaker Chemical vs. EVS Broadcast Equipment |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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