Correlation Between Valens and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Valens and Axalta Coating 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 Valens and Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valens and Axalta Coating Systems, you can compare the effects of market volatilities on Valens and Axalta Coating 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 Valens with a short position of Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valens and Axalta Coating.
Diversification Opportunities for Valens and Axalta Coating
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Valens and Axalta is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems and Valens 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 Valens are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Valens i.e., Valens and Axalta Coating go up and down completely randomly.
Pair Corralation between Valens and Axalta Coating
Considering the 90-day investment horizon Valens is expected to under-perform the Axalta Coating. In addition to that, Valens is 3.15 times more volatile than Axalta Coating Systems. It trades about -0.01 of its total potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.19 per unit of volatility. If you would invest 3,832 in Axalta Coating Systems on August 31, 2024 and sell it today you would earn a total of 221.00 from holding Axalta Coating Systems or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valens vs. Axalta Coating Systems
Performance |
| Timeline |
| Valens |
| Axalta Coating Systems |
Valens and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valens and Axalta Coating
The main advantage of trading using opposite Valens and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.The idea behind Valens and Axalta Coating Systems 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.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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