Correlation Between Spotify Technology and Air Products
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Air Products Chemicals, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Air Products.
Diversification Opportunities for Spotify Technology and Air Products
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spotify and Air is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA 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 Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and Air Products go up and down completely randomly.
Pair Corralation between Spotify Technology and Air Products
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 0.44 times more return on investment than Air Products. However, Spotify Technology SA is 2.29 times less risky than Air Products. It trades about 0.13 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.03 per unit of risk. If you would invest 13,878 in Spotify Technology SA on September 2, 2024 and sell it today you would earn a total of 31,267 from holding Spotify Technology SA or generate 225.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Spotify Technology SA vs. Air Products Chemicals
Performance |
| Timeline |
| Spotify Technology |
| Air Products Chemicals |
Spotify Technology and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Air Products
The main advantage of trading using opposite Spotify Technology and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.| Spotify Technology vs. Ecclesiastical Insurance Office | Spotify Technology vs. Associated British Foods | Spotify Technology vs. Wyndham Hotels Resorts | Spotify Technology vs. Host Hotels Resorts |
| Air Products vs. Uniper SE | Air Products vs. Mulberry Group PLC | Air Products vs. London Security Plc | Air Products vs. Triad Group PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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