Correlation Between Origin Materials and Triton International

Can any of the company-specific risk be diversified away by investing in both Origin Materials and Triton International 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 Origin Materials and Triton International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Origin Materials and Triton International Limited, you can compare the effects of market volatilities on Origin Materials and Triton International 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 Origin Materials with a short position of Triton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Triton International.

Diversification Opportunities for Origin Materials and Triton International

0.58

Correlation Coefficient

Origin Materials  Triton International

Very weak diversification

The 3 months correlation between Origin and Triton is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International and Origin Materials 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 Origin Materials are associated (or correlated) with Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of Origin Materials i.e., Origin Materials and Triton International go up and down completely randomly.

Pair Corralation between Origin Materials and Triton International

Given the investment horizon of 90 days Origin Materials is expected to generate 5.72 times more return on investment than Triton International. However, Origin Materials is 5.72 times more volatile than Triton International Limited. It trades about 0.05 of its potential returns per unit of risk. Triton International Limited is currently generating about 0.04 per unit of risk. If you would invest  87.00  in Origin Materials on September 15, 2024 and sell it today you would earn a total of  28.00  from holding Origin Materials or generate 32.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Origin Materials  vs.  Triton International Limited

Origin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Triton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triton International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Triton International is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Origin Materials and Triton International

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

The idea behind Origin Materials and Triton International Limited 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.