Correlation Between Air Products and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both Air Products and Hollywood Bowl 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 Hollywood Bowl 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 Hollywood Bowl Group, you can compare the effects of market volatilities on Air Products and Hollywood Bowl 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 Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Hollywood Bowl.
Diversification Opportunities for Air Products and Hollywood Bowl
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and Hollywood is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group 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 Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Air Products i.e., Air Products and Hollywood Bowl go up and down completely randomly.
Pair Corralation between Air Products and Hollywood Bowl
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 3.55 times more return on investment than Hollywood Bowl. However, Air Products is 3.55 times more volatile than Hollywood Bowl Group. It trades about 0.03 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.05 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 Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Air Products Chemicals vs. Hollywood Bowl Group
Performance |
| Timeline |
| Air Products Chemicals |
| Hollywood Bowl Group |
Air Products and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Hollywood Bowl
The main advantage of trading using opposite Air Products and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl'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 |
| Hollywood Bowl vs. Sovereign Metals | Hollywood Bowl vs. Fidelity National Information | Hollywood Bowl vs. European Metals Holdings | Hollywood Bowl vs. GlobalData 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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