Correlation Between Quaker Chemical and Oil Dri

Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and Oil Dri 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 Quaker Chemical and Oil Dri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quaker Chemical and Oil Dri, you can compare the effects of market volatilities on Quaker Chemical and Oil Dri 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 Quaker Chemical with a short position of Oil Dri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Oil Dri.

Diversification Opportunities for Quaker Chemical and Oil Dri

0.15

Correlation Coefficient

Quaker Chemical  Oil Dri

Average diversification

The 3 months correlation between Quaker and Oil is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Oil Dri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Dri and Quaker Chemical 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 Quaker Chemical are associated (or correlated) with Oil Dri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Dri has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Oil Dri go up and down completely randomly.

Pair Corralation between Quaker Chemical and Oil Dri

Considering the 90-day investment horizon Quaker Chemical is expected to generate 43.99 times less return on investment than Oil Dri. In addition to that, Quaker Chemical is 1.08 times more volatile than Oil Dri. It trades about 0.01 of its total potential returns per unit of risk. Oil Dri is currently generating about 0.24 per unit of volatility. If you would invest  6,604  in Oil Dri on August 7, 2024 and sell it today you would earn a total of  592.00  from holding Oil Dri or generate 8.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Quaker Chemical  vs.  Oil Dri

Quaker Chemical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quaker Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Quaker Chemical is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Oil Dri

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Dri are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Oil Dri may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Quaker Chemical and Oil Dri

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

The idea behind Quaker Chemical and Oil Dri 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.