Correlation Between United States and Mativ Holdings

Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Mativ Holdings 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 Mativ Holdings, you can compare the effects of market volatilities on United States 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 United States with a short position of Mativ Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Mativ Holdings.

Diversification Opportunities for United States and Mativ Holdings

-0.37

Correlation Coefficient

United States  Mativ Holdings

Very good diversification

The 3 months correlation between United and Mativ is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings 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 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 United States i.e., United States and Mativ Holdings go up and down completely randomly.

Pair Corralation between United States and Mativ Holdings

Taking into account the 90-day investment horizon United States Steel is expected to generate 0.78 times more return on investment than Mativ Holdings. However, United States Steel is 1.29 times less risky than Mativ Holdings. It trades about -0.02 of its potential returns per unit of risk. Mativ Holdings is currently generating about -0.17 per unit of risk. If you would invest  3,633  in United States Steel on September 15, 2024 and sell it today you would lose (231.00) from holding United States Steel or give up 6.36% of portfolio value over 90 days.

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

United States Steel  vs.  Mativ Holdings

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 fairly strong basic indicators, United States is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 United States and Mativ Holdings

The main advantage of trading using opposite United States and Mativ Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.