Correlation Between Livermore Investments and Air Products
Can any of the company-specific risk be diversified away by investing in both Livermore Investments 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 Livermore Investments and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livermore Investments Group and Air Products Chemicals, you can compare the effects of market volatilities on Livermore Investments 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 Livermore Investments with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livermore Investments and Air Products.
Diversification Opportunities for Livermore Investments and Air Products
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Livermore and Air is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments 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 Livermore Investments 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 Livermore Investments 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 Livermore Investments i.e., Livermore Investments and Air Products go up and down completely randomly.
Pair Corralation between Livermore Investments and Air Products
Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 0.99 times more return on investment than Air Products. However, Livermore Investments Group is 1.01 times less risky than Air Products. It trades about 0.25 of its potential returns per unit of risk. Air Products Chemicals is currently generating about -0.93 per unit of risk. If you would invest 4,500 in Livermore Investments Group on September 24, 2024 and sell it today you would earn a total of 160.00 from holding Livermore Investments Group or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Livermore Investments Group vs. Air Products Chemicals
Performance |
| Timeline |
| Livermore Investments |
| Air Products Chemicals |
Livermore Investments and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livermore Investments and Air Products
The main advantage of trading using opposite Livermore Investments and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments 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.| Livermore Investments vs. Samsung Electronics Co | Livermore Investments vs. Samsung Electronics Co | Livermore Investments vs. Hyundai Motor | Livermore Investments vs. Toyota Motor Corp |
| Air Products vs. FC Investment Trust | Air Products vs. Axway Software SA | Air Products vs. Livermore Investments Group | Air Products vs. Atresmedia |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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