Correlation Between Axalta Coating and Where Food

Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Where Food 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 Axalta Coating and Where Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axalta Coating Systems and Where Food Comes, you can compare the effects of market volatilities on Axalta Coating and Where Food 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 Axalta Coating with a short position of Where Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Where Food.

Diversification Opportunities for Axalta Coating and Where Food

-0.45

Correlation Coefficient

Axalta Coating  Where Food

Very good diversification

The 3 months correlation between Axalta and Where is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Where Food Comes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Where Food Comes and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Where Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Where Food Comes has no effect on the direction of Axalta Coating i.e., Axalta Coating and Where Food go up and down completely randomly.

Pair Corralation between Axalta Coating and Where Food

Given the investment horizon of 90 days Axalta Coating is expected to generate 1.86 times less return on investment than Where Food. But when comparing it to its historical volatility, Axalta Coating Systems is 1.29 times less risky than Where Food. It trades about 0.14 of its potential returns per unit of risk. Where Food Comes is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,065  in Where Food Comes on February 5, 2024 and sell it today you would earn a total of  135.00  from holding Where Food Comes or generate 12.68% return on investment over 90 days.

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

Axalta Coating Systems  vs.  Where Food Comes

Axalta Coating Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axalta Coating Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Axalta Coating may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Where Food Comes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Where Food Comes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Axalta Coating and Where Food

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

The idea behind Axalta Coating Systems and Where Food Comes 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.