Correlation Between Air Products and Lendinvest PLC
Can any of the company-specific risk be diversified away by investing in both Air Products and Lendinvest PLC 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 Lendinvest PLC 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 Lendinvest PLC, you can compare the effects of market volatilities on Air Products and Lendinvest PLC 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 Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Lendinvest PLC.
Diversification Opportunities for Air Products and Lendinvest PLC
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Lendinvest is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest 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 Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Air Products i.e., Air Products and Lendinvest PLC go up and down completely randomly.
Pair Corralation between Air Products and Lendinvest PLC
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 1.01 times more return on investment than Lendinvest PLC. However, Air Products is 1.01 times more volatile than Lendinvest PLC. It trades about 0.27 of its potential returns per unit of risk. Lendinvest PLC is currently generating about 0.08 per unit of risk. If you would invest 31,089 in Air Products Chemicals on September 1, 2024 and sell it today you would earn a total of 2,140 from holding Air Products Chemicals or generate 6.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Air Products Chemicals vs. Lendinvest PLC
Performance |
Timeline |
Air Products Chemicals |
Lendinvest PLC |
Air Products and Lendinvest PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air Products and Lendinvest PLC
The main advantage of trading using opposite Air Products and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Lendinvest PLC 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 Lendinvest PLC will offset losses from the drop in Lendinvest PLC's 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 |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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