Correlation Between Axalta Coating and Dow
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Dow 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 Axalta Coating and Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and Dow Inc, you can compare the effects of market volatilities on Axalta Coating and Dow 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 Axalta Coating with a short position of Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Dow.
Diversification Opportunities for Axalta Coating and Dow
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Axalta and Dow is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of Axalta Coating i.e., Axalta Coating and Dow go up and down completely randomly.
Pair Corralation between Axalta Coating and Dow
Given the investment horizon of 90 days Axalta Coating is expected to generate 1.4 times less return on investment than Dow. But when comparing it to its historical volatility, Axalta Coating Systems is 1.33 times less risky than Dow. It trades about 0.33 of its potential returns per unit of risk. Dow Inc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,092 in Dow Inc on June 9, 2025 and sell it today you would earn a total of 358.00 from holding Dow Inc or generate 17.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. Dow Inc
Performance |
| Timeline |
| Axalta Coating Systems |
| Dow Inc |
Axalta Coating and Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Dow
The main advantage of trading using opposite Axalta Coating and Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, Dow 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 Dow will offset losses from the drop in Dow's long position.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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