Correlation Between IAA and Avient Corp

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

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

Diversification Opportunities for IAA and Avient Corp

0.0

Correlation Coefficient

IAA  Avient Corp

Pay attention - limited upside

The 3 months correlation between IAA and Avient is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IAA Inc and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp and IAA 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 IAA Inc 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 IAA i.e., IAA and Avient Corp go up and down completely randomly.

Pair Corralation between IAA and Avient Corp

If you would invest (100.00) in IAA Inc on December 26, 2024 and sell it today you would earn a total of  100.00  from holding IAA Inc 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

IAA Inc  vs.  Avient Corp

IAA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days IAA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IAA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with IAA and Avient Corp

The main advantage of trading using opposite IAA and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAA 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 IAA Inc 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.