Correlation Between Air Products and ESGEN Acquisition
Can any of the company-specific risk be diversified away by investing in both Air Products and ESGEN Acquisition 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 ESGEN Acquisition 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 ESGEN Acquisition Corp, you can compare the effects of market volatilities on Air Products and ESGEN Acquisition 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 ESGEN Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and ESGEN Acquisition.
Diversification Opportunities for Air Products and ESGEN Acquisition
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and ESGEN is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and ESGEN Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGEN Acquisition Corp 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 ESGEN Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGEN Acquisition Corp has no effect on the direction of Air Products i.e., Air Products and ESGEN Acquisition go up and down completely randomly.
Pair Corralation between Air Products and ESGEN Acquisition
Considering the 90-day investment horizon Air Products is expected to generate 1.47 times less return on investment than ESGEN Acquisition. In addition to that, Air Products is 2.22 times more volatile than ESGEN Acquisition Corp. It trades about 0.02 of its total potential returns per unit of risk. ESGEN Acquisition Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,027 in ESGEN Acquisition Corp on September 5, 2024 and sell it today you would earn a total of 74.00 from holding ESGEN Acquisition Corp or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 30.51% |
| Values | Daily Returns |
Air Products and vs. ESGEN Acquisition Corp
Performance |
| Timeline |
| Air Products |
| ESGEN Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Air Products and ESGEN Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and ESGEN Acquisition
The main advantage of trading using opposite Air Products and ESGEN Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, ESGEN Acquisition 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 ESGEN Acquisition will offset losses from the drop in ESGEN Acquisition's long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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