Correlation Between Cabot and Akzo Nobel

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

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

Diversification Opportunities for Cabot and Akzo Nobel

0.0

Correlation Coefficient

Cabot  Akzo Nobel

Pay attention - limited upside

The 3 months correlation between Cabot and Akzo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cabot and Akzo Nobel NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akzo Nobel NV and Cabot 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 Cabot are associated (or correlated) with Akzo Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akzo Nobel NV has no effect on the direction of Cabot i.e., Cabot and Akzo Nobel go up and down completely randomly.

Pair Corralation between Cabot and Akzo Nobel

If you would invest (100.00) in Akzo Nobel NV on December 1, 2024 and sell it today you would earn a total of  100.00  from holding Akzo Nobel NV or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cabot  vs.  Akzo Nobel NV

Cabot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cabot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Akzo Nobel NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Akzo Nobel NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Akzo Nobel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cabot and Akzo Nobel

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

The idea behind Cabot and Akzo Nobel NV 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.