Correlation Between Morgan Advanced and Air Products
Can any of the company-specific risk be diversified away by investing in both Morgan 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 Morgan 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 Morgan Advanced Materials and Air Products Chemicals, you can compare the effects of market volatilities on Morgan 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 Morgan Advanced with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Advanced and Air Products.
Diversification Opportunities for Morgan Advanced and Air Products
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Morgan and Air is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials 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 Morgan 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 Morgan 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 Chemicals has no effect on the direction of Morgan Advanced i.e., Morgan Advanced and Air Products go up and down completely randomly.
Pair Corralation between Morgan Advanced and Air Products
Assuming the 90 days trading horizon Morgan Advanced Materials is expected to generate 1.05 times more return on investment than Air Products. However, Morgan Advanced is 1.05 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 0.37 per unit of risk. If you would invest 24,350 in Morgan Advanced Materials on September 3, 2024 and sell it today you would earn a total of 2,200 from holding Morgan Advanced Materials or generate 9.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Advanced Materials vs. Air Products Chemicals
Performance |
| Timeline |
| Morgan Advanced Materials |
| Air Products Chemicals |
Morgan Advanced and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Advanced and Air Products
The main advantage of trading using opposite Morgan Advanced and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan 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.| Morgan Advanced vs. Bell Food Group | Morgan Advanced vs. Verizon Communications | Morgan Advanced vs. Fevertree Drinks Plc | Morgan Advanced vs. Tyson Foods Cl |
| Air Products vs. Morgan Advanced Materials | Air Products vs. Applied Materials | Air Products vs. Compagnie Plastic Omnium | Air Products vs. Spirent Communications plc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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