Correlation Between Stepan and Marine Products
Can any of the company-specific risk be diversified away by investing in both Stepan and Marine Products 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 Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Marine Products, you can compare the effects of market volatilities on Stepan and Marine Products 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Marine Products.
Diversification Opportunities for Stepan and Marine Products
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stepan and Marine is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Stepan i.e., Stepan and Marine Products go up and down completely randomly.
Pair Corralation between Stepan and Marine Products
Considering the 90-day investment horizon Stepan is expected to generate 1.25 times less return on investment than Marine Products. In addition to that, Stepan is 1.09 times more volatile than Marine Products. It trades about 0.06 of its total potential returns per unit of risk. Marine Products is currently generating about 0.08 per unit of volatility. If you would invest 897.00 in Marine Products on September 12, 2024 and sell it today you would earn a total of 66.00 from holding Marine Products or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Marine Products
Performance |
| Timeline |
| Stepan Company |
| Marine Products |
Stepan and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Marine Products
The main advantage of trading using opposite Stepan and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.| Stepan vs. LyondellBasell Industries NV | Stepan vs. International Flavors Fragrances | Stepan vs. Cabot | Stepan vs. Westlake Chemical |
| Marine Products vs. Clarus Corp | Marine Products vs. Escalade Incorporated | Marine Products vs. Johnson Outdoors | Marine Products vs. JAKKS Pacific |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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