Correlation Between Core Molding and NewMarket
Can any of the company-specific risk be diversified away by investing in both Core Molding and NewMarket 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 Core Molding and NewMarket into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Molding Technologies and NewMarket, you can compare the effects of market volatilities on Core Molding and NewMarket 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 Core Molding with a short position of NewMarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Molding and NewMarket.
Diversification Opportunities for Core Molding and NewMarket
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Core and NewMarket is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Core Molding Technologies and NewMarket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMarket and Core Molding 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 Core Molding Technologies are associated (or correlated) with NewMarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMarket has no effect on the direction of Core Molding i.e., Core Molding and NewMarket go up and down completely randomly.
Pair Corralation between Core Molding and NewMarket
Considering the 90-day investment horizon Core Molding is expected to generate 1.28 times less return on investment than NewMarket. In addition to that, Core Molding is 2.15 times more volatile than NewMarket. It trades about 0.03 of its total potential returns per unit of risk. NewMarket is currently generating about 0.09 per unit of volatility. If you would invest 30,139 in NewMarket on September 14, 2024 and sell it today you would earn a total of 23,728 from holding NewMarket or generate 78.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Core Molding Technologies vs. NewMarket
Performance |
Timeline |
Core Molding Technologies |
NewMarket |
Core Molding and NewMarket Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Core Molding and NewMarket
The main advantage of trading using opposite Core Molding and NewMarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Molding position performs unexpectedly, NewMarket 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 NewMarket will offset losses from the drop in NewMarket's long position.Core Molding vs. Perimeter Solutions SA | Core Molding vs. Kronos Worldwide | Core Molding vs. Sensient Technologies | Core Molding vs. Element Solutions |
NewMarket vs. H B Fuller | NewMarket vs. Minerals Technologies | NewMarket vs. Quaker Chemical | NewMarket vs. Oil Dri |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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