Correlation Between Avient Corp and Ashland Global

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Can any of the company-specific risk be diversified away by investing in both Avient Corp and Ashland Global 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 Avient Corp and Ashland Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avient Corp and Ashland Global Holdings, you can compare the effects of market volatilities on Avient Corp and Ashland Global 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 Avient Corp with a short position of Ashland Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and Ashland Global.

Diversification Opportunities for Avient Corp and Ashland Global

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Avient and Ashland is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Ashland Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashland Global Holdings and Avient Corp 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 Avient Corp are associated (or correlated) with Ashland Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashland Global Holdings has no effect on the direction of Avient Corp i.e., Avient Corp and Ashland Global go up and down completely randomly.

Pair Corralation between Avient Corp and Ashland Global

Given the investment horizon of 90 days Avient Corp is expected to generate 1.41 times more return on investment than Ashland Global. However, Avient Corp is 1.41 times more volatile than Ashland Global Holdings. It trades about 0.01 of its potential returns per unit of risk. Ashland Global Holdings is currently generating about 0.01 per unit of risk. If you would invest  4,372  in Avient Corp on December 30, 2023 and sell it today you would lose (32.00) from holding Avient Corp or give up 0.73% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Avient Corp  vs.  Ashland Global Holdings

 Performance 
       Timeline  
Avient Corp 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Avient Corp may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Ashland Global Holdings 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ashland Global Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Ashland Global demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Avient Corp and Ashland Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Avient Corp and Ashland Global

The main advantage of trading using opposite Avient Corp and Ashland Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp position performs unexpectedly, Ashland Global 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 Ashland Global will offset losses from the drop in Ashland Global's long position.
The idea behind Avient Corp and Ashland Global Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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