Correlation Between Arq and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Arq 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 Arq and Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arq Inc and Axalta Coating Systems, you can compare the effects of market volatilities on Arq 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 Arq with a short position of Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arq and Axalta Coating.
Diversification Opportunities for Arq and Axalta Coating
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arq and Axalta is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Arq Inc 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 Arq 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 Arq Inc 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 Arq i.e., Arq and Axalta Coating go up and down completely randomly.
Pair Corralation between Arq and Axalta Coating
Considering the 90-day investment horizon Arq Inc is expected to generate 2.01 times more return on investment than Axalta Coating. However, Arq is 2.01 times more volatile than Axalta Coating Systems. It trades about 0.06 of its potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.04 per unit of risk. If you would invest 598.00 in Arq Inc on October 26, 2024 and sell it today you would earn a total of 57.00 from holding Arq Inc or generate 9.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Arq Inc vs. Axalta Coating Systems
Performance |
Timeline |
Arq Inc |
Axalta Coating Systems |
Arq and Axalta Coating Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Arq and Axalta Coating
The main advantage of trading using opposite Arq and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arq 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.Arq vs. Hewlett Packard Enterprise | ||
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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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