Correlation Between Ashland Global and FMC
Can any of the company-specific risk be diversified away by investing in both Ashland Global and FMC 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 Ashland Global and FMC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashland Global Holdings and FMC Corporation, you can compare the effects of market volatilities on Ashland Global and FMC 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 Ashland Global with a short position of FMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashland Global and FMC.
Diversification Opportunities for Ashland Global and FMC
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ashland and FMC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and FMC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FMC Corporation and Ashland Global 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 Ashland Global Holdings are associated (or correlated) with FMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FMC Corporation has no effect on the direction of Ashland Global i.e., Ashland Global and FMC go up and down completely randomly.
Pair Corralation between Ashland Global and FMC
Considering the 90-day investment horizon Ashland Global Holdings is expected to generate 0.39 times more return on investment than FMC. However, Ashland Global Holdings is 2.58 times less risky than FMC. It trades about -0.07 of its potential returns per unit of risk. FMC Corporation is currently generating about -0.18 per unit of risk. If you would invest 9,539 in Ashland Global Holdings on January 16, 2024 and sell it today you would lose (182.00) from holding Ashland Global Holdings or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashland Global Holdings vs. FMC Corp.
Performance |
| Timeline |
| Ashland Global Holdings |
| FMC Corporation |
Ashland Global and FMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashland Global and FMC
The main advantage of trading using opposite Ashland Global and FMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global position performs unexpectedly, FMC 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 FMC will offset losses from the drop in FMC's long position.| Ashland Global vs. Linde plc Ordinary | Ashland Global vs. LyondellBasell Industries NV | Ashland Global vs. Air Products and | Ashland Global vs. Cabot |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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