Correlation Between SNC Lavalin and Balchem
Can any of the company-specific risk be diversified away by investing in both SNC Lavalin and Balchem 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 SNC Lavalin and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNC Lavalin Group and Balchem, you can compare the effects of market volatilities on SNC Lavalin and Balchem 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 SNC Lavalin with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNC Lavalin and Balchem.
Diversification Opportunities for SNC Lavalin and Balchem
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SNC and Balchem is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SNC Lavalin Group and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and SNC Lavalin 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 SNC Lavalin Group are associated (or correlated) with Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of SNC Lavalin i.e., SNC Lavalin and Balchem go up and down completely randomly.
Pair Corralation between SNC Lavalin and Balchem
Assuming the 90 days horizon SNC Lavalin is expected to generate 1.39 times less return on investment than Balchem. In addition to that, SNC Lavalin is 2.39 times more volatile than Balchem. It trades about 0.08 of its total potential returns per unit of risk. Balchem is currently generating about 0.26 per unit of volatility. If you would invest 16,616 in Balchem on August 25, 2024 and sell it today you would earn a total of 1,628 from holding Balchem or generate 9.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNC Lavalin Group vs. Balchem
Performance |
| Timeline |
| SNC Lavalin Group |
| Balchem |
SNC Lavalin and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNC Lavalin and Balchem
The main advantage of trading using opposite SNC Lavalin and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNC Lavalin position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.| SNC Lavalin vs. Element Solutions | SNC Lavalin vs. Orion Engineered Carbons | SNC Lavalin vs. Minerals Technologies | SNC Lavalin vs. Ingevity Corp |
| Balchem vs. Eshallgo Class A | Balchem vs. Amtech Systems | Balchem vs. Gold Fields Ltd | Balchem vs. Aegean Airlines SA |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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