Correlation Between Select Energy and Ashland Global
Can any of the company-specific risk be diversified away by investing in both Select Energy and Ashland Global 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 Select Energy and Ashland Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Energy Services and Ashland Global Holdings, you can compare the effects of market volatilities on Select Energy and Ashland Global 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 Select Energy with a short position of Ashland Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Energy and Ashland Global.
Diversification Opportunities for Select Energy and Ashland Global
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Select and Ashland is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Select Energy Services and Ashland Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashland Global Holdings and Select Energy 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 Select Energy Services are associated (or correlated) with Ashland Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashland Global Holdings has no effect on the direction of Select Energy i.e., Select Energy and Ashland Global go up and down completely randomly.
Pair Corralation between Select Energy and Ashland Global
Given the investment horizon of 90 days Select Energy Services is expected to generate 0.71 times more return on investment than Ashland Global. However, Select Energy Services is 1.41 times less risky than Ashland Global. It trades about -0.13 of its potential returns per unit of risk. Ashland Global Holdings is currently generating about -0.16 per unit of risk. If you would invest 1,376 in Select Energy Services on November 2, 2024 and sell it today you would lose (66.00) from holding Select Energy Services or give up 4.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Energy Services vs. Ashland Global Holdings
Performance |
| Timeline |
| Select Energy Services |
| Ashland Global Holdings |
Select Energy and Ashland Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Energy and Ashland Global
The main advantage of trading using opposite Select Energy and Ashland Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Energy position performs unexpectedly, Ashland Global 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 Ashland Global will offset losses from the drop in Ashland Global's long position.| Select Energy vs. Orion Engineered Carbons | Select Energy vs. Element Solutions | Select Energy vs. Kronos Worldwide | Select Energy vs. FutureFuel Corp |
| Ashland Global vs. H B Fuller | Ashland Global vs. Element Solutions | Ashland Global vs. Balchem | Ashland Global vs. Avantor |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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