Correlation Between AIR PRODCHEMICALS and Science Applications
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and Science Applications 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 PRODCHEMICALS and Science Applications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Science Applications International, you can compare the effects of market volatilities on AIR PRODCHEMICALS and Science Applications 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 PRODCHEMICALS with a short position of Science Applications. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Science Applications.
Diversification Opportunities for AIR PRODCHEMICALS and Science Applications
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AIR and Science is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications and AIR PRODCHEMICALS 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 PRODCHEMICALS are associated (or correlated) with Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Science Applications go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Science Applications
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.95 times more return on investment than Science Applications. However, AIR PRODCHEMICALS is 1.05 times less risky than Science Applications. It trades about -0.1 of its potential returns per unit of risk. Science Applications International is currently generating about -0.15 per unit of risk. If you would invest 31,230 in AIR PRODCHEMICALS on November 29, 2024 and sell it today you would lose (1,200) from holding AIR PRODCHEMICALS or give up 3.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Science Applications Internati
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Science Applications |
AIR PRODCHEMICALS and Science Applications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Science Applications
The main advantage of trading using opposite AIR PRODCHEMICALS and Science Applications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, Science Applications 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 Science Applications will offset losses from the drop in Science Applications' long position.| AIR PRODCHEMICALS vs. Retail Estates NV | AIR PRODCHEMICALS vs. FAST RETAIL ADR | AIR PRODCHEMICALS vs. United Overseas Insurance | AIR PRODCHEMICALS vs. CREDIT AGRICOLE |
| Science Applications vs. CHEMICAL INDUSTRIES | Science Applications vs. Siamgas And Petrochemicals | Science Applications vs. Marie Brizard Wine | Science Applications vs. SEKISUI CHEMICAL |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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