Correlation Between Avient Corp and BCB Bancorp

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

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

Diversification Opportunities for Avient Corp and BCB Bancorp

0.05

Correlation Coefficient

Avient Corp  BCB Bancorp

Significant diversification

The 3 months correlation between Avient and BCB is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp and Avient Corp 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 Avient Corp are associated (or correlated) with BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Avient Corp i.e., Avient Corp and BCB Bancorp go up and down completely randomly.

Pair Corralation between Avient Corp and BCB Bancorp

Given the investment horizon of 90 days Avient Corp is expected to generate 0.92 times more return on investment than BCB Bancorp. However, Avient Corp is 1.08 times less risky than BCB Bancorp. It trades about -0.03 of its potential returns per unit of risk. BCB Bancorp is currently generating about -0.09 per unit of risk. If you would invest  3,985  in Avient Corp on December 28, 2024 and sell it today you would lose (152.00) from holding Avient Corp or give up 3.81% of portfolio value over 90 days.

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

Avient Corp  vs.  BCB Bancorp

Avient Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Avient Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BCB Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days BCB Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Avient Corp and BCB Bancorp

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

The idea behind Avient Corp and BCB Bancorp 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.