Correlation Between Air Products and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Air Products and Raytheon Technologies 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 Raytheon Technologies 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 Raytheon Technologies Corp, you can compare the effects of market volatilities on Air Products and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Raytheon Technologies.
Diversification Opportunities for Air Products and Raytheon Technologies
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and Raytheon is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Air Products i.e., Air Products and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Air Products and Raytheon Technologies
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 0.77 times more return on investment than Raytheon Technologies. However, Air Products Chemicals is 1.3 times less risky than Raytheon Technologies. It trades about 0.21 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about -0.04 per unit of risk. If you would invest 31,569 in Air Products Chemicals on August 30, 2024 and sell it today you would earn a total of 1,770 from holding Air Products Chemicals or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products Chemicals vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Air Products Chemicals |
| Raytheon Technologies |
Air Products and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Raytheon Technologies
The main advantage of trading using opposite Air Products and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Air Products vs. Tungsten West PLC | Air Products vs. Argo Group Limited | Air Products vs. Hardide PLC | Air Products vs. Versarien PLC |
| Raytheon Technologies vs. Tungsten West PLC | Raytheon Technologies vs. Argo Group Limited | Raytheon Technologies vs. Hardide PLC | Raytheon Technologies vs. Versarien 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |