Correlation Between Air Products and Assurant
Can any of the company-specific risk be diversified away by investing in both Air Products and Assurant 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 Assurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Assurant, you can compare the effects of market volatilities on Air Products and Assurant 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 Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Assurant.
Diversification Opportunities for Air Products and Assurant
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Assurant is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant 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 and are associated (or correlated) with Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Air Products i.e., Air Products and Assurant go up and down completely randomly.
Pair Corralation between Air Products and Assurant
Considering the 90-day investment horizon Air Products is expected to generate 3.07 times less return on investment than Assurant. In addition to that, Air Products is 1.24 times more volatile than Assurant. It trades about 0.03 of its total potential returns per unit of risk. Assurant is currently generating about 0.12 per unit of volatility. If you would invest 12,073 in Assurant on September 19, 2024 and sell it today you would earn a total of 9,660 from holding Assurant or generate 80.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Assurant
Performance |
| Timeline |
| Air Products |
| Assurant |
Air Products and Assurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Assurant
The main advantage of trading using opposite Air Products and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Assurant 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 Assurant will offset losses from the drop in Assurant's long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact Holdings |
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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