Correlation Between Quaker Chemical and BANNER
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and BANNER 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 BANNER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and BANNER, you can compare the effects of market volatilities on Quaker Chemical and BANNER 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 BANNER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and BANNER.
Diversification Opportunities for Quaker Chemical and BANNER
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Quaker and BANNER is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and BANNER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANNER 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 BANNER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANNER has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and BANNER go up and down completely randomly.
Pair Corralation between Quaker Chemical and BANNER
Assuming the 90 days horizon Quaker Chemical is expected to under-perform the BANNER. But the stock apears to be less risky and, when comparing its historical volatility, Quaker Chemical is 1.05 times less risky than BANNER. The stock trades about -0.01 of its potential returns per unit of risk. The BANNER is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,197 in BANNER on October 11, 2024 and sell it today you would earn a total of 1,203 from holding BANNER or generate 23.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. BANNER
Performance |
| Timeline |
| Quaker Chemical |
| BANNER |
Quaker Chemical and BANNER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and BANNER
The main advantage of trading using opposite Quaker Chemical and BANNER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, BANNER 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 BANNER will offset losses from the drop in BANNER's long position.| Quaker Chemical vs. PENN NATL GAMING | Quaker Chemical vs. CPU SOFTWAREHOUSE | Quaker Chemical vs. Hochschild Mining plc | Quaker Chemical vs. CyberArk Software |
| BANNER vs. Quaker Chemical | BANNER vs. SEKISUI CHEMICAL | BANNER vs. X FAB Silicon Foundries | BANNER vs. Silicon Motion Technology |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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