Correlation Between Select Sector and Chemours
Can any of the company-specific risk be diversified away by investing in both Select Sector and Chemours 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 Select Sector and Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Select Sector and The Chemours, you can compare the effects of market volatilities on Select Sector and Chemours 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 Select Sector with a short position of Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Sector and Chemours.
Diversification Opportunities for Select Sector and Chemours
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Select and Chemours is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Select Sector and The Chemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and Select Sector 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 The Select Sector are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Select Sector i.e., Select Sector and Chemours go up and down completely randomly.
Pair Corralation between Select Sector and Chemours
Assuming the 90 days trading horizon The Select Sector is expected to generate 0.61 times more return on investment than Chemours. However, The Select Sector is 1.64 times less risky than Chemours. It trades about 0.04 of its potential returns per unit of risk. The Chemours is currently generating about -0.01 per unit of risk. If you would invest 121,333 in The Select Sector on October 27, 2024 and sell it today you would earn a total of 40,367 from holding The Select Sector or generate 33.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Select Sector vs. The Chemours
Performance |
Timeline |
Select Sector |
Chemours |
Select Sector and Chemours Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Select Sector and Chemours
The main advantage of trading using opposite Select Sector and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Sector position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector |
Chemours vs. Ecolab Inc | Chemours vs. PPG Industries | Chemours vs. ALPEK SAB de | Chemours vs. iShares Global Timber |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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