Correlation Between Mativ Holdings and EON Resources

Can any of the company-specific risk be diversified away by investing in both Mativ Holdings and EON 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 EON 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 EON Resources, you can compare the effects of market volatilities on Mativ Holdings and EON 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 EON Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mativ Holdings and EON Resources.

Diversification Opportunities for Mativ Holdings and EON Resources

0.6

Correlation Coefficient

Mativ Holdings  EON Resources

Poor diversification

The 3 months correlation between Mativ and EON is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and EON Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON Resources 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 EON Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON Resources has no effect on the direction of Mativ Holdings i.e., Mativ Holdings and EON Resources go up and down completely randomly.

Pair Corralation between Mativ Holdings and EON Resources

Given the investment horizon of 90 days Mativ Holdings is expected to generate 0.33 times more return on investment than EON Resources. However, Mativ Holdings is 3.06 times less risky than EON Resources. It trades about -0.05 of its potential returns per unit of risk. EON Resources is currently generating about -0.05 per unit of risk. If you would invest  1,705  in Mativ Holdings on September 21, 2024 and sell it today you would lose (535.00) from holding Mativ Holdings or give up 31.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Mativ Holdings  vs.  EON Resources

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.

EON Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EON Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, EON Resources 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 Mativ Holdings and EON Resources

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

The idea behind Mativ Holdings and EON Resources 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.