Correlation Between Chemours and Albemarle Corp
Can any of the company-specific risk be diversified away by investing in both Chemours and Albemarle Corp 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 Chemours and Albemarle Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Albemarle Corp, you can compare the effects of market volatilities on Chemours and Albemarle Corp 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 Chemours with a short position of Albemarle Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Albemarle Corp.
Diversification Opportunities for Chemours and Albemarle Corp
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chemours and Albemarle is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Albemarle Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle Corp and Chemours 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 Chemours Co are associated (or correlated) with Albemarle Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle Corp has no effect on the direction of Chemours i.e., Chemours and Albemarle Corp go up and down completely randomly.
Pair Corralation between Chemours and Albemarle Corp
Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Albemarle Corp. In addition to that, Chemours is 1.13 times more volatile than Albemarle Corp. It trades about -0.07 of its total potential returns per unit of risk. Albemarle Corp is currently generating about -0.06 per unit of volatility. If you would invest 11,835 in Albemarle Corp on January 24, 2024 and sell it today you would lose (606.00) from holding Albemarle Corp or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Albemarle Corp
Performance |
| Timeline |
| Chemours |
| Albemarle Corp |
Chemours and Albemarle Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Albemarle Corp
The main advantage of trading using opposite Chemours and Albemarle Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, Albemarle Corp 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 Albemarle Corp will offset losses from the drop in Albemarle Corp's long position.| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
| Albemarle Corp vs. Cabot | Albemarle Corp vs. Oil Dri | Albemarle Corp vs. Orion Engineered Carbons | Albemarle Corp vs. Ecovyst |
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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