Correlation Between Energizer Holdings and Quaker Chemical

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

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

Diversification Opportunities for Energizer Holdings and Quaker Chemical

-0.28

Correlation Coefficient

Energizer Holdings  Quaker Chemical

Very good diversification

The 3 months correlation between Energizer and Quaker is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Energizer Holdings and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Energizer 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 Energizer Holdings are associated (or correlated) with Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Energizer Holdings i.e., Energizer Holdings and Quaker Chemical go up and down completely randomly.

Pair Corralation between Energizer Holdings and Quaker Chemical

Considering the 90-day investment horizon Energizer Holdings is expected to generate 0.69 times more return on investment than Quaker Chemical. However, Energizer Holdings is 1.45 times less risky than Quaker Chemical. It trades about 0.17 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.12 per unit of risk. If you would invest  3,014  in Energizer Holdings on September 26, 2024 and sell it today you would earn a total of  545.00  from holding Energizer Holdings or generate 18.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Energizer Holdings  vs.  Quaker Chemical

Energizer Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energizer Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Energizer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Quaker Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quaker Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Energizer Holdings and Quaker Chemical

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

The idea behind Energizer Holdings and Quaker Chemical 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.