Correlation Between Chemours and Avient Corp

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

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

Diversification Opportunities for Chemours and Avient Corp

0.66

Correlation Coefficient

Chemours  Avient Corp

Poor diversification

The 3 months correlation between Chemours and Avient is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp and Chemours 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 Chemours Co are associated (or correlated) with Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Chemours i.e., Chemours and Avient Corp go up and down completely randomly.

Pair Corralation between Chemours and Avient Corp

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 2.28 times more return on investment than Avient Corp. However, Chemours is 2.28 times more volatile than Avient Corp. It trades about -0.05 of its potential returns per unit of risk. Avient Corp is currently generating about -0.32 per unit of risk. If you would invest  1,905  in Chemours Co on September 19, 2024 and sell it today you would lose (84.00) from holding Chemours Co or give up 4.41% of portfolio value over 90 days.

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

Chemours Co  vs.  Avient Corp

Chemours

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Chemours is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Avient Corp

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Chemours and Avient Corp

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

The idea behind Chemours Co and Avient Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.