Correlation Between Air Products and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both Air Products and Minerals Technologies 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 Minerals Technologies 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 Minerals Technologies, you can compare the effects of market volatilities on Air Products and Minerals Technologies 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Minerals Technologies.
Diversification Opportunities for Air Products and Minerals Technologies
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Minerals is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Air Products i.e., Air Products and Minerals Technologies go up and down completely randomly.
Pair Corralation between Air Products and Minerals Technologies
Considering the 90-day investment horizon Air Products is expected to generate 2.37 times less return on investment than Minerals Technologies. But when comparing it to its historical volatility, Air Products and is 1.09 times less risky than Minerals Technologies. It trades about 0.02 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,029 in Minerals Technologies on August 28, 2024 and sell it today you would earn a total of 2,431 from holding Minerals Technologies or generate 40.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Minerals Technologies
Performance |
| Timeline |
| Air Products |
| Minerals Technologies |
Air Products and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Minerals Technologies
The main advantage of trading using opposite Air Products and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| Air Products vs. PPG Industries | Air Products vs. Ecolab Inc | Air Products vs. Sherwin Williams Co | Air Products vs. LyondellBasell Industries NV |
| Minerals Technologies vs. Oil Dri | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Northern Technologies | Minerals Technologies vs. Cabot |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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