Correlation Between Element Solutions and Air Products
Can any of the company-specific risk be diversified away by investing in both Element Solutions 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 Element Solutions and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and Air Products and, you can compare the effects of market volatilities on Element Solutions 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 Element Solutions with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Air Products.
Diversification Opportunities for Element Solutions and Air Products
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Element and Air is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Element Solutions 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 Element Solutions 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 has no effect on the direction of Element Solutions i.e., Element Solutions and Air Products go up and down completely randomly.
Pair Corralation between Element Solutions and Air Products
Considering the 90-day investment horizon Element Solutions is expected to generate 1.06 times more return on investment than Air Products. However, Element Solutions is 1.06 times more volatile than Air Products and. It trades about 0.06 of its potential returns per unit of risk. Air Products and is currently generating about 0.02 per unit of risk. If you would invest 1,879 in Element Solutions on August 24, 2024 and sell it today you would earn a total of 1,025 from holding Element Solutions or generate 54.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. Air Products and
Performance |
| Timeline |
| Element Solutions |
| Air Products |
Element Solutions and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and Air Products
The main advantage of trading using opposite Element Solutions and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions 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.| Element Solutions vs. Eshallgo Class A | Element Solutions vs. Amtech Systems | Element Solutions vs. Gold Fields Ltd | Element Solutions vs. Aegean Airlines SA |
| Air Products vs. Eshallgo Class A | Air Products vs. Amtech Systems | Air Products vs. Gold Fields Ltd | Air Products vs. Aegean Airlines SA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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