Correlation Between Air Products and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Air Products and PennantPark Investment 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 PennantPark Investment 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 PennantPark Investment, you can compare the effects of market volatilities on Air Products and PennantPark Investment 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 PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and PennantPark Investment.
Diversification Opportunities for Air Products and PennantPark Investment
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and PennantPark is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment 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 PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Air Products i.e., Air Products and PennantPark Investment go up and down completely randomly.
Pair Corralation between Air Products and PennantPark Investment
Considering the 90-day investment horizon Air Products and is expected to generate 0.72 times more return on investment than PennantPark Investment. However, Air Products and is 1.39 times less risky than PennantPark Investment. It trades about 0.5 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.09 per unit of risk. If you would invest 30,609 in Air Products and on September 4, 2024 and sell it today you would earn a total of 2,953 from holding Air Products and or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. PennantPark Investment
Performance |
| Timeline |
| Air Products |
| PennantPark Investment |
Air Products and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and PennantPark Investment
The main advantage of trading using opposite Air Products and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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