Correlation Between Quaker Chemical and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and Lowes Companies 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 Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Lowes Companies, you can compare the effects of market volatilities on Quaker Chemical and Lowes Companies 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 Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Lowes Companies.
Diversification Opportunities for Quaker Chemical and Lowes Companies
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Quaker and Lowes is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Lowes Companies go up and down completely randomly.
Pair Corralation between Quaker Chemical and Lowes Companies
Assuming the 90 days horizon Quaker Chemical is expected to under-perform the Lowes Companies. But the stock apears to be less risky and, when comparing its historical volatility, Quaker Chemical is 1.09 times less risky than Lowes Companies. The stock trades about -0.27 of its potential returns per unit of risk. The Lowes Companies is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 25,980 in Lowes Companies on September 13, 2024 and sell it today you would lose (145.00) from holding Lowes Companies or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. Lowes Companies
Performance |
| Timeline |
| Quaker Chemical |
| Lowes Companies |
Quaker Chemical and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and Lowes Companies
The main advantage of trading using opposite Quaker Chemical and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| Quaker Chemical vs. ScanSource | Quaker Chemical vs. BlueScope Steel Limited | Quaker Chemical vs. KRAKATAU STEEL B | Quaker Chemical vs. Khiron Life Sciences |
| Lowes Companies vs. Playtech plc | Lowes Companies vs. Canon Marketing Japan | Lowes Companies vs. VIAPLAY GROUP AB | Lowes Companies vs. Fast Retailing Co |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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