Correlation Between Air Products and Empire Metals
Can any of the company-specific risk be diversified away by investing in both Air Products and Empire Metals 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 Empire Metals 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 Empire Metals Limited, you can compare the effects of market volatilities on Air Products and Empire Metals 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 Empire Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Empire Metals.
Diversification Opportunities for Air Products and Empire Metals
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Empire is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Empire Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Metals Limited 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 Empire Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Metals Limited has no effect on the direction of Air Products i.e., Air Products and Empire Metals go up and down completely randomly.
Pair Corralation between Air Products and Empire Metals
Assuming the 90 days trading horizon Air Products is expected to generate 2.14 times less return on investment than Empire Metals. In addition to that, Air Products is 1.11 times more volatile than Empire Metals Limited. It trades about 0.03 of its total potential returns per unit of risk. Empire Metals Limited is currently generating about 0.08 per unit of volatility. If you would invest 183.00 in Empire Metals Limited on September 1, 2024 and sell it today you would earn a total of 377.00 from holding Empire Metals Limited or generate 206.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Air Products Chemicals vs. Empire Metals Limited
Performance |
| Timeline |
| Air Products Chemicals |
| Empire Metals Limited |
Air Products and Empire Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Empire Metals
The main advantage of trading using opposite Air Products and Empire Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Empire Metals 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 Empire Metals will offset losses from the drop in Empire Metals' long position.| Air Products vs. Uniper SE | Air Products vs. Mulberry Group PLC | Air Products vs. London Security Plc | Air Products vs. Triad Group PLC |
| Empire Metals vs. Givaudan SA | Empire Metals vs. Antofagasta PLC | Empire Metals vs. Centamin PLC | Empire Metals vs. Atalaya Mining |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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