Correlation Between 5E Advanced and Air Products
Can any of the company-specific risk be diversified away by investing in both 5E Advanced 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 5E Advanced and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 5E Advanced Materials and Air Products and, you can compare the effects of market volatilities on 5E Advanced 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 5E Advanced with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5E Advanced and Air Products.
Diversification Opportunities for 5E Advanced and Air Products
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FEAM and Air is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding 5E Advanced Materials and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and 5E Advanced 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 5E Advanced Materials 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 5E Advanced i.e., 5E Advanced and Air Products go up and down completely randomly.
Pair Corralation between 5E Advanced and Air Products
Given the investment horizon of 90 days 5E Advanced Materials is expected to under-perform the Air Products. In addition to that, 5E Advanced is 4.02 times more volatile than Air Products and. It trades about -0.06 of its total potential returns per unit of risk. Air Products and is currently generating about 0.02 per unit of volatility. If you would invest 29,828 in Air Products and on October 20, 2024 and sell it today you would earn a total of 1,952 from holding Air Products and or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
5E Advanced Materials vs. Air Products and
Performance |
| Timeline |
| 5E Advanced Materials |
| Air Products |
5E Advanced and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 5E Advanced and Air Products
The main advantage of trading using opposite 5E Advanced and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5E Advanced 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.| 5E Advanced vs. Innospec | 5E Advanced vs. Minerals Technologies | 5E Advanced vs. Oil Dri | 5E Advanced vs. Quaker Chemical |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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