Correlation Between Air Products and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Air Products and Jacquet Metal 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 Jacquet Metal 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 Jacquet Metal Service, you can compare the effects of market volatilities on Air Products and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Jacquet Metal.
Diversification Opportunities for Air Products and Jacquet Metal
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Jacquet is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Air Products i.e., Air Products and Jacquet Metal go up and down completely randomly.
Pair Corralation between Air Products and Jacquet Metal
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 4.76 times more return on investment than Jacquet Metal. However, Air Products is 4.76 times more volatile than Jacquet Metal Service. It trades about 0.06 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.03 per unit of risk. If you would invest 21,599 in Air Products Chemicals on September 1, 2024 and sell it today you would earn a total of 11,630 from holding Air Products Chemicals or generate 53.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.53% |
| Values | Daily Returns |
Air Products Chemicals vs. Jacquet Metal Service
Performance |
| Timeline |
| Air Products Chemicals |
| Jacquet Metal Service |
Air Products and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Jacquet Metal
The main advantage of trading using opposite Air Products and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Air Products vs. Uniper SE | Air Products vs. Mulberry Group PLC | Air Products vs. London Security Plc | Air Products vs. Triad Group PLC |
| Jacquet Metal vs. Uniper SE | Jacquet Metal vs. Mulberry Group PLC | Jacquet Metal vs. London Security Plc | Jacquet Metal vs. Triad Group PLC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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