Correlation Between Air Products and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Air Products and PacifiCorp 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 PacifiCorp 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 PacifiCorp, you can compare the effects of market volatilities on Air Products and PacifiCorp 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 PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and PacifiCorp.
Diversification Opportunities for Air Products and PacifiCorp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and PacifiCorp is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp 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 PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Air Products i.e., Air Products and PacifiCorp go up and down completely randomly.
Pair Corralation between Air Products and PacifiCorp
Considering the 90-day investment horizon Air Products and is expected to generate 0.48 times more return on investment than PacifiCorp. However, Air Products and is 2.09 times less risky than PacifiCorp. It trades about -0.01 of its potential returns per unit of risk. PacifiCorp is currently generating about -0.01 per unit of risk. If you would invest 31,391 in Air Products and on September 12, 2024 and sell it today you would lose (105.50) from holding Air Products and or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Air Products and vs. PacifiCorp
Performance |
| Timeline |
| Air Products |
| PacifiCorp |
Air Products and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and PacifiCorp
The main advantage of trading using opposite Air Products and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, PacifiCorp 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 PacifiCorp will offset losses from the drop in PacifiCorp's long position.| Air Products vs. Griffon | Air Products vs. Merck Company | Air Products vs. Brinker International | Air Products vs. Alcoa Corp |
| PacifiCorp vs. Lipocine | PacifiCorp vs. Catalyst Pharmaceuticals | PacifiCorp vs. Western Asset Investment | PacifiCorp vs. BW Offshore Limited |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |