Correlation Between Air Products and Wacker Chemie
Can any of the company-specific risk be diversified away by investing in both Air Products and Wacker Chemie 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 Wacker Chemie 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 Wacker Chemie AG, you can compare the effects of market volatilities on Air Products and Wacker Chemie 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 Wacker Chemie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Wacker Chemie.
Diversification Opportunities for Air Products and Wacker Chemie
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Wacker is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Wacker Chemie AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wacker Chemie AG 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 Wacker Chemie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wacker Chemie AG has no effect on the direction of Air Products i.e., Air Products and Wacker Chemie go up and down completely randomly.
Pair Corralation between Air Products and Wacker Chemie
Considering the 90-day investment horizon Air Products and is expected to generate 0.74 times more return on investment than Wacker Chemie. However, Air Products and is 1.36 times less risky than Wacker Chemie. It trades about 0.11 of its potential returns per unit of risk. Wacker Chemie AG is currently generating about -0.13 per unit of risk. If you would invest 26,745 in Air Products and on August 30, 2024 and sell it today you would earn a total of 6,577 from holding Air Products and or generate 24.59% 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. Wacker Chemie AG
Performance |
| Timeline |
| Air Products |
| Wacker Chemie AG |
Air Products and Wacker Chemie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Wacker Chemie
The main advantage of trading using opposite Air Products and Wacker Chemie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Wacker Chemie 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 Wacker Chemie will offset losses from the drop in Wacker Chemie's long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| Wacker Chemie vs. Akzo Nobel NV | Wacker Chemie vs. Avoca LLC | Wacker Chemie vs. Arkema SA ADR | Wacker Chemie vs. HUMANA INC |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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