Correlation Between Hilton Food and Air Products
Can any of the company-specific risk be diversified away by investing in both Hilton Food 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 Hilton Food and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Food Group and Air Products Chemicals, you can compare the effects of market volatilities on Hilton Food 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 Hilton Food with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Air Products.
Diversification Opportunities for Hilton Food and Air Products
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hilton and Air is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group 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 Hilton Food 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 Hilton Food Group 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 Hilton Food i.e., Hilton Food and Air Products go up and down completely randomly.
Pair Corralation between Hilton Food and Air Products
Assuming the 90 days trading horizon Hilton Food is expected to generate 6.47 times less return on investment than Air Products. But when comparing it to its historical volatility, Hilton Food Group is 5.22 times less risky than Air Products. It trades about 0.05 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 20,893 in Air Products Chemicals on November 3, 2024 and sell it today you would earn a total of 12,687 from holding Air Products Chemicals or generate 60.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Hilton Food Group vs. Air Products Chemicals
Performance |
| Timeline |
| Hilton Food Group |
| Air Products Chemicals |
Hilton Food and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Food and Air Products
The main advantage of trading using opposite Hilton Food and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food 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.| Hilton Food vs. Check Point Software | Hilton Food vs. Alliance Data Systems | Hilton Food vs. Learning Technologies Group | Hilton Food vs. Rosslyn Data Technologies |
| Air Products vs. National Beverage Corp | Air Products vs. Associated British Foods | Air Products vs. CAP LEASE AVIATION | Air Products vs. Geely Automobile Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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