Correlation Between Air Products and Bt Brands
Can any of the company-specific risk be diversified away by investing in both Air Products and Bt Brands 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 Bt Brands 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 Bt Brands, you can compare the effects of market volatilities on Air Products and Bt Brands 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 Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Bt Brands.
Diversification Opportunities for Air Products and Bt Brands
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and BTBD is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Air Products i.e., Air Products and Bt Brands go up and down completely randomly.
Pair Corralation between Air Products and Bt Brands
Considering the 90-day investment horizon Air Products is expected to generate 10.04 times less return on investment than Bt Brands. But when comparing it to its historical volatility, Air Products and is 3.47 times less risky than Bt Brands. It trades about 0.01 of its potential returns per unit of risk. Bt Brands is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 180.00 in Bt Brands on September 19, 2024 and sell it today you would lose (21.00) from holding Bt Brands or give up 11.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Bt Brands
Performance |
| Timeline |
| Air Products |
| Bt Brands |
Air Products and Bt Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Bt Brands
The main advantage of trading using opposite Air Products and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| Bt Brands vs. Alsea SAB de | Bt Brands vs. Marstons PLC | Bt Brands vs. Bagger Daves Burger | Bt Brands vs. Marstons 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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