Correlation Between Stepan and Mativ Holdings
Can any of the company-specific risk be diversified away by investing in both Stepan and Mativ Holdings 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 Stepan and Mativ Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Mativ Holdings, you can compare the effects of market volatilities on Stepan and Mativ Holdings 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 Stepan with a short position of Mativ Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Mativ Holdings.
Diversification Opportunities for Stepan and Mativ Holdings
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stepan and Mativ is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings and Stepan 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 Stepan Company are associated (or correlated) with Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of Stepan i.e., Stepan and Mativ Holdings go up and down completely randomly.
Pair Corralation between Stepan and Mativ Holdings
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Mativ Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 2.32 times less risky than Mativ Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The Mativ Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,668 in Mativ Holdings on August 31, 2024 and sell it today you would lose (353.00) from holding Mativ Holdings or give up 21.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Mativ Holdings
Performance |
| Timeline |
| Stepan Company |
| Mativ Holdings |
Stepan and Mativ Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Mativ Holdings
The main advantage of trading using opposite Stepan and Mativ Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Mativ Holdings 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 Mativ Holdings will offset losses from the drop in Mativ Holdings' long position.The idea behind Stepan Company and Mativ Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mativ Holdings vs. Orion Engineered Carbons | Mativ Holdings vs. Select Energy Services | Mativ Holdings vs. Perimeter Solutions SA | Mativ Holdings vs. FutureFuel Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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