Correlation Between Air Products and Industrial Nanotech
Can any of the company-specific risk be diversified away by investing in both Air Products and Industrial Nanotech 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 Industrial Nanotech 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 Industrial Nanotech, you can compare the effects of market volatilities on Air Products and Industrial Nanotech 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 Industrial Nanotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Industrial Nanotech.
Diversification Opportunities for Air Products and Industrial Nanotech
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Industrial is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Industrial Nanotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Nanotech 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 Industrial Nanotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Nanotech has no effect on the direction of Air Products i.e., Air Products and Industrial Nanotech go up and down completely randomly.
Pair Corralation between Air Products and Industrial Nanotech
Considering the 90-day investment horizon Air Products is expected to generate 178.39 times less return on investment than Industrial Nanotech. But when comparing it to its historical volatility, Air Products and is 116.7 times less risky than Industrial Nanotech. It trades about 0.11 of its potential returns per unit of risk. Industrial Nanotech is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Industrial Nanotech on August 31, 2024 and sell it today you would lose (0.02) from holding Industrial Nanotech or give up 100.0% 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. Industrial Nanotech
Performance |
| Timeline |
| Air Products |
| Industrial Nanotech |
Air Products and Industrial Nanotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Industrial Nanotech
The main advantage of trading using opposite Air Products and Industrial Nanotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Industrial Nanotech 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 Industrial Nanotech will offset losses from the drop in Industrial Nanotech's long position.| Air Products vs. Eastman Chemical | Air Products vs. Linde plc Ordinary | Air Products vs. Ecolab Inc | Air Products vs. Sherwin Williams Co |
| Industrial Nanotech vs. Sherwin Williams Co | Industrial Nanotech vs. Air Liquide SA | Industrial Nanotech vs. LAir Liquide SA | Industrial Nanotech vs. Air Products and |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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