Correlation Between Axalta Coating and Marchex

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

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

Diversification Opportunities for Axalta Coating and Marchex

-0.24

Correlation Coefficient

Axalta Coating  Marchex

Very good diversification

The 3 months correlation between Axalta and Marchex is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Axalta Coating i.e., Axalta Coating and Marchex go up and down completely randomly.

Pair Corralation between Axalta Coating and Marchex

Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.41 times more return on investment than Marchex. However, Axalta Coating Systems is 2.43 times less risky than Marchex. It trades about 0.27 of its potential returns per unit of risk. Marchex is currently generating about 0.04 per unit of risk. If you would invest  3,463  in Axalta Coating Systems on October 26, 2024 and sell it today you would earn a total of  231.00  from holding Axalta Coating Systems or generate 6.67% return on investment over 90 days.

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

Axalta Coating Systems  vs.  Marchex

Axalta Coating Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axalta Coating Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Axalta Coating is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Marchex

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axalta Coating and Marchex

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

The idea behind Axalta Coating Systems and Marchex 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.