Correlation Between Sika AG and Livent Corp
Can any of the company-specific risk be diversified away by investing in both Sika AG and Livent Corp 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 Sika AG and Livent Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG and Livent Corp, you can compare the effects of market volatilities on Sika AG and Livent Corp 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 Sika AG with a short position of Livent Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and Livent Corp.
Diversification Opportunities for Sika AG and Livent Corp
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sika and Livent is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG and Livent Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livent Corp and Sika AG 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 Sika AG are associated (or correlated) with Livent Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livent Corp has no effect on the direction of Sika AG i.e., Sika AG and Livent Corp go up and down completely randomly.
Pair Corralation between Sika AG and Livent Corp
Assuming the 90 days horizon Sika AG is expected to generate 1.01 times more return on investment than Livent Corp. However, Sika AG is 1.01 times more volatile than Livent Corp. It trades about 0.01 of its potential returns per unit of risk. Livent Corp is currently generating about -0.05 per unit of risk. If you would invest 26,801 in Sika AG on September 1, 2024 and sell it today you would lose (1,394) from holding Sika AG or give up 5.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 8.33% |
| Values | Daily Returns |
Sika AG vs. Livent Corp
Performance |
| Timeline |
| Sika AG |
| Livent Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sika AG and Livent Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sika AG and Livent Corp
The main advantage of trading using opposite Sika AG and Livent Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG position performs unexpectedly, Livent Corp 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 Livent Corp will offset losses from the drop in Livent Corp's long position.| Sika AG vs. Sherwin Williams Co | Sika AG vs. Air Liquide SA | Sika AG vs. LAir Liquide SA | Sika AG vs. Air Products and |
| Livent Corp vs. Albemarle Corp | Livent Corp vs. Linde plc Ordinary | Livent Corp vs. Air Products and | Livent Corp vs. Dupont De Nemours |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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