Correlation Between United States and Avient Corp

Can any of the company-specific risk be diversified away by investing in both United States and Avient Corp 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 United States and Avient Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United States Steel and Avient Corp, you can compare the effects of market volatilities on United States and Avient Corp 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 United States with a short position of Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Avient Corp.

Diversification Opportunities for United States and Avient Corp

0.48

Correlation Coefficient

United States  Avient Corp

Very weak diversification

The 3 months correlation between United and Avient is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp and United States 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 United States Steel are associated (or correlated) with Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of United States i.e., United States and Avient Corp go up and down completely randomly.

Pair Corralation between United States and Avient Corp

Taking into account the 90-day investment horizon United States Steel is expected to under-perform the Avient Corp. In addition to that, United States is 1.49 times more volatile than Avient Corp. It trades about -0.02 of its total potential returns per unit of risk. Avient Corp is currently generating about 0.0 per unit of volatility. If you would invest  4,334  in Avient Corp on September 19, 2024 and sell it today you would lose (97.00) from holding Avient Corp or give up 2.24% of portfolio value over 90 days.

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

United States Steel  vs.  Avient Corp

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Avient Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with United States and Avient Corp

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

The idea behind United States Steel and Avient Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.