Correlation Between Air Products and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Air Products and Charter Communications 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 Air Products and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products Chemicals and Charter Communications Cl, you can compare the effects of market volatilities on Air Products and Charter Communications 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 Air Products with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Charter Communications.
Diversification Opportunities for Air Products and Charter Communications
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Charter is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Air Products 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 Air Products Chemicals are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Air Products i.e., Air Products and Charter Communications go up and down completely randomly.
Pair Corralation between Air Products and Charter Communications
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 2.81 times more return on investment than Charter Communications. However, Air Products is 2.81 times more volatile than Charter Communications Cl. It trades about 0.04 of its potential returns per unit of risk. Charter Communications Cl is currently generating about 0.01 per unit of risk. If you would invest 26,465 in Air Products Chemicals on September 12, 2024 and sell it today you would earn a total of 4,753 from holding Air Products Chemicals or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.81% |
| Values | Daily Returns |
Air Products Chemicals vs. Charter Communications Cl
Performance |
| Timeline |
| Air Products Chemicals |
| Charter Communications |
Air Products and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Charter Communications
The main advantage of trading using opposite Air Products and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Air Products vs. Hong Kong Land | Air Products vs. Neometals | Air Products vs. Coor Service Management | Air Products vs. Fidelity Sustainable USD |
| Charter Communications vs. Hong Kong Land | Charter Communications vs. Neometals | Charter Communications vs. Coor Service Management | Charter Communications vs. Fidelity Sustainable USD |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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