Correlation Between Johnson Matthey and Venator Materials

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

By analyzing existing cross correlation between Johnson Matthey PLC and Venator Materials PLC, you can compare the effects of market volatilities on Johnson Matthey and Venator Materials 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 Johnson Matthey with a short position of Venator Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Venator Materials.

Diversification Opportunities for Johnson Matthey and Venator Materials

0.0

Correlation Coefficient

Johnson Matthey  Venator Materials

Pay attention - limited upside

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

Pair Corralation between Johnson Matthey and Venator Materials

If you would invest  3,337  in Johnson Matthey PLC on December 30, 2024 and sell it today you would earn a total of  186.00  from holding Johnson Matthey PLC or generate 5.57% return on investment over 90 days.

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

Johnson Matthey PLC  vs.  Venator Materials PLC

Johnson Matthey PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Johnson Matthey PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Johnson Matthey may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Venator Materials PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Venator Materials PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Venator Materials is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Johnson Matthey and Venator Materials

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

The idea behind Johnson Matthey PLC and Venator Materials PLC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.