Correlation Between Air Products and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Air Products and Sealed Air 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 Sealed Air 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 Sealed Air Corp, you can compare the effects of market volatilities on Air Products and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Sealed Air.
Diversification Opportunities for Air Products and Sealed Air
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and Sealed is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Sealed Air Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air Corp 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air Corp has no effect on the direction of Air Products i.e., Air Products and Sealed Air go up and down completely randomly.
Pair Corralation between Air Products and Sealed Air
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 1.06 times more return on investment than Sealed Air. However, Air Products is 1.06 times more volatile than Sealed Air Corp. It trades about -0.07 of its potential returns per unit of risk. Sealed Air Corp is currently generating about -0.33 per unit of risk. If you would invest 32,525 in Air Products Chemicals on November 28, 2024 and sell it today you would lose (840.00) from holding Air Products Chemicals or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Air Products Chemicals vs. Sealed Air Corp
Performance |
| Timeline |
| Air Products Chemicals |
| Sealed Air Corp |
Air Products and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Sealed Air
The main advantage of trading using opposite Air Products and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.| Air Products vs. Flutter Entertainment PLC | Air Products vs. LBG Media PLC | Air Products vs. Electronic Arts | Air Products vs. G5 Entertainment AB |
| Sealed Air vs. Schroders Investment Trusts | Sealed Air vs. AMG Advanced Metallurgical | Sealed Air vs. Aurora Investment Trust | Sealed Air vs. BlackRock Frontiers Investment |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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