Correlation Between Aspen Aerogels and CRH PLC
Can any of the company-specific risk be diversified away by investing in both Aspen Aerogels and CRH PLC 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 Aspen Aerogels and CRH PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Aerogels and CRH PLC ADR, you can compare the effects of market volatilities on Aspen Aerogels and CRH PLC 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 Aspen Aerogels with a short position of CRH PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Aerogels and CRH PLC.
Diversification Opportunities for Aspen Aerogels and CRH PLC
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aspen and CRH is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Aerogels and CRH PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRH PLC ADR and Aspen Aerogels 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 Aspen Aerogels are associated (or correlated) with CRH PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRH PLC ADR has no effect on the direction of Aspen Aerogels i.e., Aspen Aerogels and CRH PLC go up and down completely randomly.
Pair Corralation between Aspen Aerogels and CRH PLC
Given the investment horizon of 90 days Aspen Aerogels is expected to generate 2.79 times more return on investment than CRH PLC. However, Aspen Aerogels is 2.79 times more volatile than CRH PLC ADR. It trades about 0.08 of its potential returns per unit of risk. CRH PLC ADR is currently generating about -0.37 per unit of risk. If you would invest 1,583 in Aspen Aerogels on January 24, 2024 and sell it today you would earn a total of 80.00 from holding Aspen Aerogels or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Aerogels vs. CRH PLC ADR
Performance |
| Timeline |
| Aspen Aerogels |
| CRH PLC ADR |
Aspen Aerogels and CRH PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Aerogels and CRH PLC
The main advantage of trading using opposite Aspen Aerogels and CRH PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Aerogels position performs unexpectedly, CRH PLC 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 CRH PLC will offset losses from the drop in CRH PLC's long position.| Aspen Aerogels vs. Apyx Medical | Aspen Aerogels vs. Century Communities | Aspen Aerogels vs. Ardmore Shpng | Aspen Aerogels vs. American Assets Trust |
| CRH PLC vs. Martin Marietta Materials | CRH PLC vs. Eagle Materials | CRH PLC vs. Summit Materials | CRH PLC vs. United States Lime |
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 CEOs Directory module to screen CEOs from public companies around the world.
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