Correlation Between Stepan and Ardagh
Specify exactly 2 symbols:
By analyzing existing cross correlation between Stepan Company and Ardagh Holdings USA, you can compare the effects of market volatilities on Stepan and Ardagh 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 Ardagh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Ardagh.
Diversification Opportunities for Stepan and Ardagh
Good diversification
The 3 months correlation between Stepan and Ardagh is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Ardagh Holdings USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Holdings USA 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 Ardagh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Holdings USA has no effect on the direction of Stepan i.e., Stepan and Ardagh go up and down completely randomly.
Pair Corralation between Stepan and Ardagh
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Ardagh. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 32.33 times less risky than Ardagh. The stock trades about -0.03 of its potential returns per unit of risk. The Ardagh Holdings USA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,448 in Ardagh Holdings USA on August 31, 2024 and sell it today you would lose (2,998) from holding Ardagh Holdings USA or give up 35.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.21% |
| Values | Daily Returns |
Stepan Company vs. Ardagh Holdings USA
Performance |
| Timeline |
| Stepan Company |
| Ardagh Holdings USA |
Stepan and Ardagh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Ardagh
The main advantage of trading using opposite Stepan and Ardagh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Ardagh 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 Ardagh will offset losses from the drop in Ardagh's long position.The idea behind Stepan Company and Ardagh Holdings USA 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.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |