Correlation Between LOWES and Chemours
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By analyzing existing cross correlation between LOWES INC 6875 and Chemours Co, you can compare the effects of market volatilities on LOWES 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 LOWES with a short position of Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOWES and Chemours.
Diversification Opportunities for LOWES and Chemours
Very good diversification
The 3 months correlation between LOWES and Chemours is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding LOWES INC 6875 and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and LOWES 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 LOWES INC 6875 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 LOWES i.e., LOWES and Chemours go up and down completely randomly.
Pair Corralation between LOWES and Chemours
Assuming the 90 days trading horizon LOWES is expected to generate 7.06 times less return on investment than Chemours. But when comparing it to its historical volatility, LOWES INC 6875 is 3.04 times less risky than Chemours. It trades about 0.02 of its potential returns per unit of risk. Chemours Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,891 in Chemours Co on September 14, 2024 and sell it today you would earn a total of 49.00 from holding Chemours Co or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOWES INC 6875 vs. Chemours Co
Performance |
| Timeline |
| LOWES INC 6875 |
| Chemours |
LOWES and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOWES and Chemours
The main advantage of trading using opposite LOWES and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOWES 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.The idea behind LOWES INC 6875 and Chemours Co 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.| Chemours vs. Eastman Chemical | Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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