Correlation Between Air Products and Target Healthcare
Can any of the company-specific risk be diversified away by investing in both Air Products and Target Healthcare 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 Target Healthcare 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 Target Healthcare REIT, you can compare the effects of market volatilities on Air Products and Target Healthcare 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 Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Target Healthcare.
Diversification Opportunities for Air Products and Target Healthcare
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Air and Target is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT 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 Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of Air Products i.e., Air Products and Target Healthcare go up and down completely randomly.
Pair Corralation between Air Products and Target Healthcare
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 2.32 times more return on investment than Target Healthcare. However, Air Products is 2.32 times more volatile than Target Healthcare REIT. It trades about 0.03 of its potential returns per unit of risk. Target Healthcare REIT is currently generating about 0.03 per unit of risk. If you would invest 29,963 in Air Products Chemicals on September 2, 2024 and sell it today you would earn a total of 3,266 from holding Air Products Chemicals or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Air Products Chemicals vs. Target Healthcare REIT
Performance |
| Timeline |
| Air Products Chemicals |
| Target Healthcare REIT |
Air Products and Target Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Target Healthcare
The main advantage of trading using opposite Air Products and Target Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Target Healthcare 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 Target Healthcare will offset losses from the drop in Target Healthcare'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 |
| Target Healthcare vs. Hammerson PLC | Target Healthcare vs. Workspace Group PLC | Target Healthcare vs. Supermarket Income REIT | Target Healthcare 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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