Correlation Between Mativ Holdings and Affiliated Resources

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

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

Diversification Opportunities for Mativ Holdings and Affiliated Resources

0.65

Correlation Coefficient

Mativ Holdings  Affiliated Resources

Poor diversification

The 3 months correlation between Mativ and Affiliated is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and Affiliated Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Resources Corp and Mativ Holdings 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 Mativ Holdings are associated (or correlated) with Affiliated Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Resources Corp has no effect on the direction of Mativ Holdings i.e., Mativ Holdings and Affiliated Resources go up and down completely randomly.

Pair Corralation between Mativ Holdings and Affiliated Resources

Given the investment horizon of 90 days Mativ Holdings is expected to under-perform the Affiliated Resources. But the stock apears to be less risky and, when comparing its historical volatility, Mativ Holdings is 1.75 times less risky than Affiliated Resources. The stock trades about -0.17 of its potential returns per unit of risk. The Affiliated Resources Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Affiliated Resources Corp on September 15, 2024 and sell it today you would lose (1.50) from holding Affiliated Resources Corp or give up 15.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Mativ Holdings  vs.  Affiliated Resources Corp

Mativ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Affiliated Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affiliated Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Affiliated Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Mativ Holdings and Affiliated Resources

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

The idea behind Mativ Holdings and Affiliated Resources 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.