Correlation Between Air Products and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Air Products and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on Air Products and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Spirent Communications.
Diversification Opportunities for Air Products and Spirent Communications
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Spirent is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Air Products i.e., Air Products and Spirent Communications go up and down completely randomly.
Pair Corralation between Air Products and Spirent Communications
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 1.38 times more return on investment than Spirent Communications. However, Air Products is 1.38 times more volatile than Spirent Communications plc. It trades about 0.02 of its potential returns per unit of risk. Spirent Communications plc is currently generating about -0.01 per unit of risk. If you would invest 30,809 in Air Products Chemicals on September 3, 2024 and sell it today you would earn a total of 2,420 from holding Air Products Chemicals or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Air Products Chemicals vs. Spirent Communications plc
Performance |
| Timeline |
| Air Products Chemicals |
| Spirent Communications |
Air Products and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Spirent Communications
The main advantage of trading using opposite Air Products and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Air Products vs. Morgan Advanced Materials | Air Products vs. Applied Materials | Air Products vs. Compagnie Plastic Omnium | Air Products vs. Spirent Communications plc |
| Spirent Communications vs. CVS Health Corp | Spirent Communications vs. Cardinal Health | Spirent Communications vs. Planet Fitness Cl | Spirent Communications vs. Federal Realty Investment |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |