Correlation Between Air Products and SM Investments
Can any of the company-specific risk be diversified away by investing in both Air Products and SM Investments 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 SM Investments 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 SM Investments, you can compare the effects of market volatilities on Air Products and SM Investments 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 SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and SM Investments.
Diversification Opportunities for Air Products and SM Investments
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and SVTMF is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and SM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments 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 SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments has no effect on the direction of Air Products i.e., Air Products and SM Investments go up and down completely randomly.
Pair Corralation between Air Products and SM Investments
If you would invest 28,324 in Air Products and on November 7, 2024 and sell it today you would earn a total of 5,202 from holding Air Products and or generate 18.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. SM Investments
Performance |
| Timeline |
| Air Products |
| SM Investments |
Air Products and SM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and SM Investments
The main advantage of trading using opposite Air Products and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, SM Investments 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 SM Investments will offset losses from the drop in SM Investments' long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| SM Investments vs. Yuexiu Transport Infrastructure | SM Investments vs. Delek Logistics Partners | SM Investments vs. Proficient Auto Logistics, | SM Investments vs. Sea |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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