Correlation Between Air Products and IsraelLtd
Can any of the company-specific risk be diversified away by investing in both Air Products and IsraelLtd 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 IsraelLtd 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 Israel, you can compare the effects of market volatilities on Air Products and IsraelLtd 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 IsraelLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and IsraelLtd.
Diversification Opportunities for Air Products and IsraelLtd
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and IsraelLtd is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IsraelLtd 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 IsraelLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IsraelLtd has no effect on the direction of Air Products i.e., Air Products and IsraelLtd go up and down completely randomly.
Pair Corralation between Air Products and IsraelLtd
Considering the 90-day investment horizon Air Products and is expected to generate 2.79 times more return on investment than IsraelLtd. However, Air Products is 2.79 times more volatile than Israel. It trades about 0.11 of its potential returns per unit of risk. Israel is currently generating about -0.12 per unit of risk. If you would invest 26,745 in Air Products and on August 31, 2024 and sell it today you would earn a total of 6,688 from holding Air Products and or generate 25.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Air Products and vs. Israel
Performance |
| Timeline |
| Air Products |
| IsraelLtd |
Air Products and IsraelLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and IsraelLtd
The main advantage of trading using opposite Air Products and IsraelLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, IsraelLtd 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 IsraelLtd will offset losses from the drop in IsraelLtd'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 |
| IsraelLtd vs. Sherwin Williams Co | IsraelLtd vs. Air Liquide SA | IsraelLtd vs. LAir Liquide SA | IsraelLtd 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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