Correlation Between AGF Management and Air Products
Can any of the company-specific risk be diversified away by investing in both AGF Management 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 AGF Management and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGF Management Limited and Air Products and, you can compare the effects of market volatilities on AGF Management 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 AGF Management with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Air Products.
Diversification Opportunities for AGF Management and Air Products
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AGF and Air is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and AGF Management 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 AGF Management Limited 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 has no effect on the direction of AGF Management i.e., AGF Management and Air Products go up and down completely randomly.
Pair Corralation between AGF Management and Air Products
Assuming the 90 days horizon AGF Management Limited is expected to generate 1.21 times more return on investment than Air Products. However, AGF Management is 1.21 times more volatile than Air Products and. It trades about 0.07 of its potential returns per unit of risk. Air Products and is currently generating about 0.02 per unit of risk. If you would invest 384.00 in AGF Management Limited on September 3, 2024 and sell it today you would earn a total of 346.00 from holding AGF Management Limited or generate 90.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. Air Products and
Performance |
| Timeline |
| AGF Management |
| Air Products |
AGF Management and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and Air Products
The main advantage of trading using opposite AGF Management and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management 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.| AGF Management vs. American Eagle Outfitters | AGF Management vs. Citic Telecom International | AGF Management vs. Warner Music Group | AGF Management vs. Spirent Communications plc |
| Air Products vs. EAT WELL INVESTMENT | Air Products vs. COLUMBIA SPORTSWEAR | Air Products vs. Sporttotal AG | Air Products vs. PennyMac Mortgage 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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