Correlation Between Johnson Matthey and Mativ Holdings

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

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

Diversification Opportunities for Johnson Matthey and Mativ Holdings

-0.31

Correlation Coefficient

Johnson Matthey  Mativ Holdings

Very good diversification

The 3 months correlation between Johnson and Mativ is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey Plc and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings and Johnson Matthey 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 Johnson Matthey Plc are associated (or correlated) with Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and Mativ Holdings go up and down completely randomly.

Pair Corralation between Johnson Matthey and Mativ Holdings

If you would invest  2,000  in Johnson Matthey Plc on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Johnson Matthey Plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Johnson Matthey Plc  vs.  Mativ Holdings

Johnson Matthey Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Johnson Matthey Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Johnson Matthey is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Johnson Matthey and Mativ Holdings

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

The idea behind Johnson Matthey Plc and Mativ Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.