Correlation Between Stepan and Avient Corp
Can any of the company-specific risk be diversified away by investing in both Stepan and Avient 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 Stepan and Avient Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Avient Corp, you can compare the effects of market volatilities on Stepan and Avient 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 Stepan with a short position of Avient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Avient Corp.
Diversification Opportunities for Stepan and Avient Corp
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stepan and Avient is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp and Stepan 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 Stepan Company are associated (or correlated) with Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Stepan i.e., Stepan and Avient Corp go up and down completely randomly.
Pair Corralation between Stepan and Avient Corp
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Avient Corp. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 1.09 times less risky than Avient Corp. The stock trades about -0.02 of its potential returns per unit of risk. The Avient Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,556 in Avient Corp on June 1, 2025 and sell it today you would earn a total of 167.00 from holding Avient Corp or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. Avient Corp
Performance |
| Timeline |
| Stepan Company |
| Avient Corp |
Stepan and Avient Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Avient Corp
The main advantage of trading using opposite Stepan and Avient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, Avient 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 Avient Corp will offset losses from the drop in Avient Corp's long position.The idea behind Stepan Company and Avient Corp 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.| Avient Corp vs. Air Products and | Avient Corp vs. Linde plc Ordinary | Avient Corp vs. LyondellBasell Industries NV | Avient Corp vs. Eastman Chemical |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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