Correlation Between Canadian General and Air Products
Can any of the company-specific risk be diversified away by investing in both Canadian General and Air Products 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 Canadian General and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian General Investments and Air Products Chemicals, you can compare the effects of market volatilities on Canadian General and Air Products 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 Canadian General with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Air Products.
Diversification Opportunities for Canadian General and Air Products
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and Air is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Canadian General 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 Canadian General Investments are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Canadian General i.e., Canadian General and Air Products go up and down completely randomly.
Pair Corralation between Canadian General and Air Products
Assuming the 90 days trading horizon Canadian General Investments is expected to generate 1.07 times more return on investment than Air Products. However, Canadian General is 1.07 times more volatile than Air Products Chemicals. It trades about 0.01 of its potential returns per unit of risk. Air Products Chemicals is currently generating about -0.04 per unit of risk. If you would invest 231,000 in Canadian General Investments on October 30, 2024 and sell it today you would earn a total of 0.00 from holding Canadian General Investments or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Canadian General Investments vs. Air Products Chemicals
Performance |
| Timeline |
| Canadian General Inv |
| Air Products Chemicals |
Canadian General and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and Air Products
The main advantage of trading using opposite Canadian General and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Canadian General vs. Cornish Metals | Canadian General vs. Beeks Trading | Canadian General vs. OneSavings Bank PLC | Canadian General vs. Ecclesiastical Insurance Office |
| Air Products vs. Pressure Technologies Plc | Air Products vs. Sealed Air Corp | Air Products vs. Xeros Technology Group | Air Products vs. Check Point Software |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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