Correlation Between Air Products and Livermore Investments
Can any of the company-specific risk be diversified away by investing in both Air Products and Livermore Investments 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 Livermore Investments 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 Livermore Investments Group, you can compare the effects of market volatilities on Air Products and Livermore Investments 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 Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Livermore Investments.
Diversification Opportunities for Air Products and Livermore Investments
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Livermore is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments 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 Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of Air Products i.e., Air Products and Livermore Investments go up and down completely randomly.
Pair Corralation between Air Products and Livermore Investments
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 3.09 times more return on investment than Livermore Investments. However, Air Products is 3.09 times more volatile than Livermore Investments Group. It trades about 0.03 of its potential returns per unit of risk. Livermore Investments Group is currently generating about 0.09 per unit of risk. If you would invest 27,494 in Air Products Chemicals on October 16, 2024 and sell it today you would earn a total of 3,253 from holding Air Products Chemicals or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Air Products Chemicals vs. Livermore Investments Group
Performance |
| Timeline |
| Air Products Chemicals |
| Livermore Investments |
Air Products and Livermore Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Livermore Investments
The main advantage of trading using opposite Air Products and Livermore Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Livermore Investments 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 Livermore Investments will offset losses from the drop in Livermore Investments' long position.| Air Products vs. Livermore Investments Group | Air Products vs. Canadian General Investments | Air Products vs. Bellevue Healthcare Trust | Air Products vs. Beeks Trading |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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