Correlation Between Iron Mountain and Air Products
Can any of the company-specific risk be diversified away by investing in both Iron Mountain and Air Products 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 Iron Mountain and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Mountain and Air Products Chemicals, you can compare the effects of market volatilities on Iron Mountain and Air Products 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 Iron Mountain with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and Air Products.
Diversification Opportunities for Iron Mountain and Air Products
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iron and Air is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Iron Mountain 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 Iron Mountain are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Iron Mountain i.e., Iron Mountain and Air Products go up and down completely randomly.
Pair Corralation between Iron Mountain and Air Products
Assuming the 90 days trading horizon Iron Mountain is expected to generate 0.32 times more return on investment than Air Products. However, Iron Mountain is 3.13 times less risky than Air Products. It trades about 0.1 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.02 per unit of risk. If you would invest 4,779 in Iron Mountain on October 11, 2024 and sell it today you would earn a total of 5,432 from holding Iron Mountain or generate 113.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Iron Mountain vs. Air Products Chemicals
Performance |
| Timeline |
| Iron Mountain |
| Air Products Chemicals |
Iron Mountain and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Mountain and Air Products
The main advantage of trading using opposite Iron Mountain and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Iron Mountain vs. Veolia Environnement VE | Iron Mountain vs. Ironveld Plc | Iron Mountain vs. Foresight Environmental Infrastructure | Iron Mountain vs. Solstad Offshore ASA |
| Air Products vs. Iron Mountain | Air Products vs. Cizzle Biotechnology Holdings | Air Products vs. Odfjell Drilling | Air Products vs. Veolia Environnement VE |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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