Correlation Between Ecovyst and Kinsale Capital

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

Diversification Opportunities for Ecovyst and Kinsale Capital

-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between Ecovyst and Kinsale is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group and Ecovyst 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 Ecovyst are associated (or correlated) with Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of Ecovyst i.e., Ecovyst and Kinsale Capital go up and down completely randomly.

Pair Corralation between Ecovyst and Kinsale Capital

Given the investment horizon of 90 days Ecovyst is expected to under-perform the Kinsale Capital. But the stock apears to be less risky and, when comparing its historical volatility, Ecovyst is 1.55 times less risky than Kinsale Capital. The stock trades about -0.03 of its potential returns per unit of risk. The Kinsale Capital Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  41,841  in Kinsale Capital Group on December 3, 2023 and sell it today you would earn a total of  9,887  from holding Kinsale Capital Group or generate 23.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ecovyst  vs.  Kinsale Capital Group

 Performance 
       Timeline  
Ecovyst 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Ecovyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Kinsale Capital Group 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Kinsale Capital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ecovyst and Kinsale Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecovyst and Kinsale Capital

The main advantage of trading using opposite Ecovyst and Kinsale Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecovyst position performs unexpectedly, Kinsale Capital 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 Kinsale Capital will offset losses from the drop in Kinsale Capital's long position.
The idea behind Ecovyst and Kinsale Capital Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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