Correlation Between Air Products and Etsy
Can any of the company-specific risk be diversified away by investing in both Air Products and Etsy 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 Etsy 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 Etsy Inc, you can compare the effects of market volatilities on Air Products and Etsy 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 Etsy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Etsy.
Diversification Opportunities for Air Products and Etsy
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Etsy is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc 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 Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of Air Products i.e., Air Products and Etsy go up and down completely randomly.
Pair Corralation between Air Products and Etsy
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 2.13 times more return on investment than Etsy. However, Air Products is 2.13 times more volatile than Etsy Inc. It trades about 0.03 of its potential returns per unit of risk. Etsy Inc is currently generating about -0.03 per unit of risk. If you would invest 27,206 in Air Products Chemicals on August 31, 2024 and sell it today you would earn a total of 6,023 from holding Air Products Chemicals or generate 22.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.43% |
| Values | Daily Returns |
Air Products Chemicals vs. Etsy Inc
Performance |
| Timeline |
| Air Products Chemicals |
| Etsy Inc |
Air Products and Etsy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Etsy
The main advantage of trading using opposite Air Products and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Etsy 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 Etsy will offset losses from the drop in Etsy's long position.| Air Products vs. Neometals | Air Products vs. Coor Service Management | Air Products vs. Aeorema Communications Plc | Air Products vs. JLEN Environmental Assets |
| Etsy vs. Norwegian Air Shuttle | Etsy vs. Pentair PLC | Etsy vs. Air Products Chemicals | Etsy vs. Alaska Air Group |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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