Correlation Between Stagwell and Chemours
Can any of the company-specific risk be diversified away by investing in both Stagwell and Chemours 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 Stagwell and Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and Chemours Co, you can compare the effects of market volatilities on Stagwell and Chemours 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 Stagwell with a short position of Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Chemours.
Diversification Opportunities for Stagwell and Chemours
Poor diversification
The 3 months correlation between Stagwell and Chemours is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Stagwell 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 Stagwell are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Stagwell i.e., Stagwell and Chemours go up and down completely randomly.
Pair Corralation between Stagwell and Chemours
Given the investment horizon of 90 days Stagwell is expected to under-perform the Chemours. But the stock apears to be less risky and, when comparing its historical volatility, Stagwell is 1.25 times less risky than Chemours. The stock trades about -0.09 of its potential returns per unit of risk. The Chemours Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,955 in Chemours Co on September 12, 2024 and sell it today you would earn a total of 162.00 from holding Chemours Co or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stagwell vs. Chemours Co
Performance |
| Timeline |
| Stagwell |
| Chemours |
Stagwell and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stagwell and Chemours
The main advantage of trading using opposite Stagwell and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.| Stagwell vs. Innovid Corp | Stagwell vs. Interpublic Group of | Stagwell vs. Cimpress NV | Stagwell vs. Criteo Sa |
| Chemours vs. Griffon | Chemours vs. Merck Company | Chemours vs. Brinker International | Chemours vs. Alcoa 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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