Correlation Between Trinseo SA and Linde Plc
Can any of the company-specific risk be diversified away by investing in both Trinseo SA and Linde Plc 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 Trinseo SA and Linde Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trinseo SA and Linde plc Ordinary, you can compare the effects of market volatilities on Trinseo SA and Linde Plc 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 Trinseo SA with a short position of Linde Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trinseo SA and Linde Plc.
Diversification Opportunities for Trinseo SA and Linde Plc
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trinseo and Linde is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Trinseo SA and Linde plc Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc Ordinary and Trinseo SA 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 Trinseo SA are associated (or correlated) with Linde Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde plc Ordinary has no effect on the direction of Trinseo SA i.e., Trinseo SA and Linde Plc go up and down completely randomly.
Pair Corralation between Trinseo SA and Linde Plc
Considering the 90-day investment horizon Trinseo SA is expected to under-perform the Linde Plc. In addition to that, Trinseo SA is 5.81 times more volatile than Linde plc Ordinary. It trades about -0.04 of its total potential returns per unit of risk. Linde plc Ordinary is currently generating about -0.14 per unit of volatility. If you would invest 47,340 in Linde plc Ordinary on August 31, 2024 and sell it today you would lose (1,628) from holding Linde plc Ordinary or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trinseo SA vs. Linde plc Ordinary
Performance |
| Timeline |
| Trinseo SA |
| Linde plc Ordinary |
Trinseo SA and Linde Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trinseo SA and Linde Plc
The main advantage of trading using opposite Trinseo SA and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trinseo SA position performs unexpectedly, Linde Plc 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 Linde Plc will offset losses from the drop in Linde Plc's long position.| Trinseo SA vs. Eastman Chemical | Trinseo SA vs. Linde plc Ordinary | Trinseo SA vs. Ecolab Inc | Trinseo SA vs. Sherwin Williams Co |
| Linde Plc vs. PPG Industries | Linde Plc vs. Ecolab Inc | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. LyondellBasell Industries NV |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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