Correlation Between Air Products and Capital Drilling
Can any of the company-specific risk be diversified away by investing in both Air Products and Capital Drilling 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 Capital Drilling 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 Capital Drilling, you can compare the effects of market volatilities on Air Products and Capital Drilling 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 Capital Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Capital Drilling.
Diversification Opportunities for Air Products and Capital Drilling
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and Capital is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Drilling 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 Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Air Products i.e., Air Products and Capital Drilling go up and down completely randomly.
Pair Corralation between Air Products and Capital Drilling
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 0.55 times more return on investment than Capital Drilling. However, Air Products Chemicals is 1.8 times less risky than Capital Drilling. It trades about 0.23 of its potential returns per unit of risk. Capital Drilling is currently generating about -0.07 per unit of risk. If you would invest 31,616 in Air Products Chemicals on August 28, 2024 and sell it today you would earn a total of 1,875 from holding Air Products Chemicals or generate 5.93% 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. Capital Drilling
Performance |
| Timeline |
| Air Products Chemicals |
| Capital Drilling |
Air Products and Capital Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Capital Drilling
The main advantage of trading using opposite Air Products and Capital Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Capital Drilling 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 Capital Drilling will offset losses from the drop in Capital Drilling's long position.| Air Products vs. Impax Environmental Markets | Air Products vs. JD Sports Fashion | Air Products vs. Seche Environnement SA | Air Products vs. Lowland Investment Co |
| Capital Drilling vs. Zoom Video Communications | Capital Drilling vs. Enbridge | Capital Drilling vs. Endo International PLC | Capital Drilling vs. Diversified Energy |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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