Correlation Between Air Products and RPM International
Can any of the company-specific risk be diversified away by investing in both Air Products and RPM International 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 RPM International 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 RPM International, you can compare the effects of market volatilities on Air Products and RPM International 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 RPM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and RPM International.
Diversification Opportunities for Air Products and RPM International
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Air and RPM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and RPM International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPM International 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 RPM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPM International has no effect on the direction of Air Products i.e., Air Products and RPM International go up and down completely randomly.
Pair Corralation between Air Products and RPM International
Considering the 90-day investment horizon Air Products is expected to generate 1.51 times less return on investment than RPM International. But when comparing it to its historical volatility, Air Products and is 1.19 times less risky than RPM International. It trades about 0.2 of its potential returns per unit of risk. RPM International is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 12,945 in RPM International on August 27, 2024 and sell it today you would earn a total of 842.00 from holding RPM International or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. RPM International
Performance |
| Timeline |
| Air Products |
| RPM International |
Air Products and RPM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and RPM International
The main advantage of trading using opposite Air Products and RPM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, RPM International 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 RPM International will offset losses from the drop in RPM International's long position.| Air Products vs. PPG Industries | Air Products vs. Ecolab Inc | Air Products vs. Sherwin Williams Co | Air Products vs. LyondellBasell Industries NV |
| RPM International vs. Oil Dri | RPM International vs. H B Fuller | RPM International vs. Northern Technologies | RPM International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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