Correlation Between Air Products and Keurig Dr
Can any of the company-specific risk be diversified away by investing in both Air Products and Keurig Dr 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 Keurig Dr 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 Keurig Dr Pepper, you can compare the effects of market volatilities on Air Products and Keurig Dr 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 Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Keurig Dr.
Diversification Opportunities for Air Products and Keurig Dr
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Keurig is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Air Products i.e., Air Products and Keurig Dr go up and down completely randomly.
Pair Corralation between Air Products and Keurig Dr
Considering the 90-day investment horizon Air Products and is expected to generate 0.68 times more return on investment than Keurig Dr. However, Air Products and is 1.46 times less risky than Keurig Dr. It trades about 0.13 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.19 per unit of risk. If you would invest 32,210 in Air Products and on August 25, 2024 and sell it today you would earn a total of 973.00 from holding Air Products and or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Keurig Dr Pepper
Performance |
| Timeline |
| Air Products |
| Keurig Dr Pepper |
Air Products and Keurig Dr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Keurig Dr
The main advantage of trading using opposite Air Products and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Keurig Dr 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 Keurig Dr will offset losses from the drop in Keurig Dr's long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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