Correlation Between International Consolidated and Air Products
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Air Products Chemicals, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Air Products.
Diversification Opportunities for International Consolidated and Air Products
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Air is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air 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 International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Air Products go up and down completely randomly.
Pair Corralation between International Consolidated and Air Products
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 1.74 times more return on investment than Air Products. However, International Consolidated is 1.74 times more volatile than Air Products Chemicals. It trades about 0.37 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.23 per unit of risk. If you would invest 21,530 in International Consolidated Airlines on August 28, 2024 and sell it today you would earn a total of 3,760 from holding International Consolidated Airlines or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Air Products Chemicals
Performance |
| Timeline |
| International Consolidated |
| Air Products Chemicals |
International Consolidated and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Air Products
The main advantage of trading using opposite International Consolidated and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Ross Stores | International Consolidated vs. X FAB Silicon Foundries | International Consolidated vs. Celebrus Technologies plc | International Consolidated vs. Playtech Plc |
| Air Products vs. Impax Environmental Markets | Air Products vs. JD Sports Fashion | Air Products vs. Seche Environnement SA | Air Products vs. Lowland Investment Co |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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