Correlation Between Impax Environmental and Air Products
Can any of the company-specific risk be diversified away by investing in both Impax Environmental 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 Impax Environmental and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impax Environmental Markets and Air Products Chemicals, you can compare the effects of market volatilities on Impax Environmental 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 Impax Environmental with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impax Environmental and Air Products.
Diversification Opportunities for Impax Environmental and Air Products
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Impax and Air is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Impax Environmental Markets 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 Impax Environmental 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 Impax Environmental Markets 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 Impax Environmental i.e., Impax Environmental and Air Products go up and down completely randomly.
Pair Corralation between Impax Environmental and Air Products
Assuming the 90 days trading horizon Impax Environmental Markets is expected to under-perform the Air Products. But the stock apears to be less risky and, when comparing its historical volatility, Impax Environmental Markets is 2.63 times less risky than Air Products. The stock trades about -0.12 of its potential returns per unit of risk. The Air Products Chemicals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 29,825 in Air Products Chemicals on August 28, 2024 and sell it today you would earn a total of 3,506 from holding Air Products Chemicals or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Impax Environmental Markets vs. Air Products Chemicals
Performance |
| Timeline |
| Impax Environmental |
| Air Products Chemicals |
Impax Environmental and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impax Environmental and Air Products
The main advantage of trading using opposite Impax Environmental and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Environmental 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.| Impax Environmental vs. Catalyst Media Group | Impax Environmental vs. Oncimmune Holdings plc | Impax Environmental vs. Invesco Health Care | Impax Environmental vs. Coor Service Management |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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