Correlation Between Air Products and Innospec
Can any of the company-specific risk be diversified away by investing in both Air Products and Innospec 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 Innospec 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 Innospec, you can compare the effects of market volatilities on Air Products and Innospec 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 Innospec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Innospec.
Diversification Opportunities for Air Products and Innospec
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Innospec is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Innospec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innospec 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 Innospec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innospec has no effect on the direction of Air Products i.e., Air Products and Innospec go up and down completely randomly.
Pair Corralation between Air Products and Innospec
Considering the 90-day investment horizon Air Products and is expected to generate 0.8 times more return on investment than Innospec. However, Air Products and is 1.25 times less risky than Innospec. It trades about 0.08 of its potential returns per unit of risk. Innospec is currently generating about -0.01 per unit of risk. If you would invest 27,163 in Air Products and on September 12, 2024 and sell it today you would earn a total of 4,358 from holding Air Products and or generate 16.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Air Products and vs. Innospec
Performance |
| Timeline |
| Air Products |
| Innospec |
Air Products and Innospec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Innospec
The main advantage of trading using opposite Air Products and Innospec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Innospec 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 Innospec will offset losses from the drop in Innospec's long position.| Air Products vs. Griffon | Air Products vs. Merck Company | Air Products vs. Brinker International | Air Products vs. Alcoa Corp |
| Innospec vs. Minerals Technologies | Innospec vs. Oil Dri | Innospec vs. Quaker Chemical | Innospec vs. Sensient Technologies |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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