Correlation Between Air Products and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both Air Products and Ashtead Group 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 Ashtead Group 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 Ashtead Group PLC, you can compare the effects of market volatilities on Air Products and Ashtead Group 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 Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Ashtead Group.
Diversification Opportunities for Air Products and Ashtead Group
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Ashtead is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Ashtead Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group PLC 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 Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group PLC has no effect on the direction of Air Products i.e., Air Products and Ashtead Group go up and down completely randomly.
Pair Corralation between Air Products and Ashtead Group
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 3.78 times more return on investment than Ashtead Group. However, Air Products is 3.78 times more volatile than Ashtead Group PLC. It trades about 0.05 of its potential returns per unit of risk. Ashtead Group PLC is currently generating about 0.01 per unit of risk. If you would invest 22,362 in Air Products Chemicals on October 22, 2024 and sell it today you would earn a total of 9,038 from holding Air Products Chemicals or generate 40.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.13% |
| Values | Daily Returns |
Air Products Chemicals vs. Ashtead Group PLC
Performance |
| Timeline |
| Air Products Chemicals |
| Ashtead Group PLC |
Air Products and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Ashtead Group
The main advantage of trading using opposite Air Products and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| Air Products vs. Roebuck Food Group | Air Products vs. DFS Furniture PLC | Air Products vs. Zoom Video Communications | Air Products vs. Scandic Hotels Group |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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