Correlation Between Axalta Coating and Spyre Therapeutics

Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Spyre Therapeutics 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 Spyre Therapeutics 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 Spyre Therapeutics, you can compare the effects of market volatilities on Axalta Coating and Spyre Therapeutics 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 Spyre Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Spyre Therapeutics.

Diversification Opportunities for Axalta Coating and Spyre Therapeutics

0.28

Correlation Coefficient

Axalta Coating  Spyre Therapeutics

Modest diversification

The 3 months correlation between Axalta and Spyre is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Spyre Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spyre Therapeutics 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 Spyre Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spyre Therapeutics has no effect on the direction of Axalta Coating i.e., Axalta Coating and Spyre Therapeutics go up and down completely randomly.

Pair Corralation between Axalta Coating and Spyre Therapeutics

Given the investment horizon of 90 days Axalta Coating is expected to generate 3.14 times less return on investment than Spyre Therapeutics. But when comparing it to its historical volatility, Axalta Coating Systems is 2.88 times less risky than Spyre Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Spyre Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,254  in Spyre Therapeutics on October 7, 2024 and sell it today you would earn a total of  181.00  from holding Spyre Therapeutics or generate 8.03% return on investment over 90 days.

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

Axalta Coating Systems  vs.  Spyre Therapeutics

Axalta Coating Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axalta Coating Systems has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Spyre Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spyre Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Axalta Coating and Spyre Therapeutics

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

The idea behind Axalta Coating Systems and Spyre Therapeutics 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.