Correlation Between Chart Industries and Constellium
Can any of the company-specific risk be diversified away by investing in both Chart Industries and Constellium 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 Chart Industries and Constellium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chart Industries and Constellium Nv, you can compare the effects of market volatilities on Chart Industries and Constellium 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 Chart Industries with a short position of Constellium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and Constellium.
Diversification Opportunities for Chart Industries and Constellium
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chart and Constellium is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv and Chart Industries 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 Chart Industries are associated (or correlated) with Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Chart Industries i.e., Chart Industries and Constellium go up and down completely randomly.
Pair Corralation between Chart Industries and Constellium
Given the investment horizon of 90 days Chart Industries is expected to generate 1.6 times less return on investment than Constellium. In addition to that, Chart Industries is 1.39 times more volatile than Constellium Nv. It trades about 0.01 of its total potential returns per unit of risk. Constellium Nv is currently generating about 0.03 per unit of volatility. If you would invest 1,641 in Constellium Nv on January 20, 2024 and sell it today you would earn a total of 431.00 from holding Constellium Nv or generate 26.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chart Industries vs. Constellium Nv
Performance |
| Timeline |
| Chart Industries |
| Constellium Nv |
Chart Industries and Constellium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chart Industries and Constellium
The main advantage of trading using opposite Chart Industries and Constellium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chart Industries position performs unexpectedly, Constellium 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 Constellium will offset losses from the drop in Constellium's long position.| Chart Industries vs. Emerson Electric | Chart Industries vs. Smith AO | Chart Industries vs. Eaton PLC | Chart Industries vs. Cummins |
| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Alumina Limited PK |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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