Correlation Between EVONIK INDUSTRIES and WACKER CHEMIE

By analyzing existing cross correlation between EVONIK INDUSTRIES NA and WACKER CHEMIE O, you can compare the effects of market volatilities on EVONIK INDUSTRIES and WACKER CHEMIE 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 EVONIK INDUSTRIES with a short position of WACKER CHEMIE. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVONIK INDUSTRIES and WACKER CHEMIE.

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Can any of the company-specific risk be diversified away by investing in both EVONIK INDUSTRIES and WACKER CHEMIE 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 EVONIK INDUSTRIES and WACKER CHEMIE into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for EVONIK INDUSTRIES and WACKER CHEMIE

0.0
  Correlation Coefficient
EVONIK INDUSTRIES
WACKER CHEMIE O

Pay attention - limited upside

The 3 months correlation between EVONIK and WACKER is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EVONIK INDUSTRIES NA O N and WACKER CHEMIE O N in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on WACKER CHEMIE O and EVONIK INDUSTRIES 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 EVONIK INDUSTRIES NA are associated (or correlated) with WACKER CHEMIE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WACKER CHEMIE O has no effect on the direction of EVONIK INDUSTRIES i.e., EVONIK INDUSTRIES and WACKER CHEMIE go up and down completely randomly.

Pair Corralation between EVONIK INDUSTRIES and WACKER CHEMIE

If you would invest  0.00  in WACKER CHEMIE O on May 1, 2021 and sell it today you would earn a total of  0.00  from holding WACKER CHEMIE O or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

EVONIK INDUSTRIES NA O N  vs.  WACKER CHEMIE O N

 Performance (%) 
      Timeline 
EVONIK INDUSTRIES 
 EVONIK Performance
0 of 100
Over the last 90 days EVONIK INDUSTRIES NA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, EVONIK INDUSTRIES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
WACKER CHEMIE O 
 WACKER Performance
0 of 100
Over the last 90 days WACKER CHEMIE O has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WACKER CHEMIE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

EVONIK INDUSTRIES and WACKER CHEMIE Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with EVONIK INDUSTRIES and WACKER CHEMIE

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

EVONIK INDUSTRIES NA

Pair trading matchups for EVONIK INDUSTRIES

Amazon vs. EVONIK INDUSTRIES
Aspen Technology vs. EVONIK INDUSTRIES
Facebook vs. EVONIK INDUSTRIES
Henry Schein vs. EVONIK INDUSTRIES
Eagle MLP vs. EVONIK INDUSTRIES
China Molybdenum vs. EVONIK INDUSTRIES
Microsoft Corp vs. EVONIK INDUSTRIES
Xinjiang Goldwind vs. EVONIK INDUSTRIES
Equinix vs. EVONIK INDUSTRIES
Advance Auto vs. EVONIK INDUSTRIES
Salesforce vs. EVONIK INDUSTRIES
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against EVONIK INDUSTRIES as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. EVONIK INDUSTRIES's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, EVONIK INDUSTRIES's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to EVONIK INDUSTRIES NA.
The idea behind EVONIK INDUSTRIES NA and WACKER CHEMIE O 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.

WACKER CHEMIE O

Pair trading matchups for WACKER CHEMIE

Eagle MLP vs. WACKER CHEMIE
Facebook vs. WACKER CHEMIE
Esports Entertainment vs. WACKER CHEMIE
China Molybdenum vs. WACKER CHEMIE
Henry Schein vs. WACKER CHEMIE
Kerry Logistics vs. WACKER CHEMIE
Xinjiang Goldwind vs. WACKER CHEMIE
Twitter vs. WACKER CHEMIE
Microsoft Corp vs. WACKER CHEMIE
Gilead Sciences vs. WACKER CHEMIE
Vmware vs. WACKER CHEMIE
Ford vs. WACKER CHEMIE
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against WACKER CHEMIE as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. WACKER CHEMIE's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, WACKER CHEMIE's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to WACKER CHEMIE O.
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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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