Correlation Between Element Solutions and FutureFuel Corp
Can any of the company-specific risk be diversified away by investing in both Element Solutions and FutureFuel 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 Element Solutions and FutureFuel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and FutureFuel Corp, you can compare the effects of market volatilities on Element Solutions and FutureFuel 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 Element Solutions with a short position of FutureFuel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and FutureFuel Corp.
Diversification Opportunities for Element Solutions and FutureFuel Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Element and FutureFuel is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and FutureFuel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FutureFuel Corp and Element Solutions 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 Element Solutions are associated (or correlated) with FutureFuel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FutureFuel Corp has no effect on the direction of Element Solutions i.e., Element Solutions and FutureFuel Corp go up and down completely randomly.
Pair Corralation between Element Solutions and FutureFuel Corp
Considering the 90-day investment horizon Element Solutions is expected to under-perform the FutureFuel Corp. In addition to that, Element Solutions is 1.38 times more volatile than FutureFuel Corp. It trades about -0.04 of its total potential returns per unit of risk. FutureFuel Corp is currently generating about -0.05 per unit of volatility. If you would invest 435.00 in FutureFuel Corp on March 12, 2025 and sell it today you would lose (40.00) from holding FutureFuel Corp or give up 9.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. FutureFuel Corp
Performance |
| Timeline |
| Element Solutions |
| FutureFuel Corp |
Element Solutions and FutureFuel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and FutureFuel Corp
The main advantage of trading using opposite Element Solutions and FutureFuel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, FutureFuel 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 FutureFuel Corp will offset losses from the drop in FutureFuel Corp's long position.| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. Quaker Chemical | FutureFuel Corp vs. Ecovyst | FutureFuel Corp vs. Minerals Technologies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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