Correlation Between Ashland Global and Cabot

Can any of the company-specific risk be diversified away by investing in both Ashland Global and Cabot 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 Ashland Global and Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ashland Global Holdings and Cabot, you can compare the effects of market volatilities on Ashland Global and Cabot 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 Ashland Global with a short position of Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashland Global and Cabot.

Diversification Opportunities for Ashland Global and Cabot

-0.16

Correlation Coefficient

Ashland Global  Cabot

Good diversification

The 3 months correlation between Ashland and Cabot is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot and Ashland Global 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 Ashland Global Holdings are associated (or correlated) with Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Ashland Global i.e., Ashland Global and Cabot go up and down completely randomly.

Pair Corralation between Ashland Global and Cabot

Considering the 90-day investment horizon Ashland Global Holdings is expected to under-perform the Cabot. But the stock apears to be less risky and, when comparing its historical volatility, Ashland Global Holdings is 1.08 times less risky than Cabot. The stock trades about -0.11 of its potential returns per unit of risk. The Cabot is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,078  in Cabot on September 3, 2024 and sell it today you would earn a total of  884.00  from holding Cabot or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ashland Global Holdings  vs.  Cabot

Ashland Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashland Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Cabot

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cabot are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Cabot may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ashland Global and Cabot

The main advantage of trading using opposite Ashland Global and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.

The idea behind Ashland Global Holdings and Cabot 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.