Correlation Between Natural Health and Air Products
Can any of the company-specific risk be diversified away by investing in both Natural Health 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 Natural Health and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trends and Air Products and, you can compare the effects of market volatilities on Natural Health 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 Natural Health with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and Air Products.
Diversification Opportunities for Natural Health and Air Products
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Natural and Air is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Natural Health 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 Natural Health Trends 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 has no effect on the direction of Natural Health i.e., Natural Health and Air Products go up and down completely randomly.
Pair Corralation between Natural Health and Air Products
Assuming the 90 days trading horizon Natural Health Trends is expected to under-perform the Air Products. In addition to that, Natural Health is 1.6 times more volatile than Air Products and. It trades about -0.01 of its total potential returns per unit of risk. Air Products and is currently generating about 0.27 per unit of volatility. If you would invest 28,250 in Air Products and on September 1, 2024 and sell it today you would earn a total of 3,280 from holding Air Products and or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Natural Health Trends vs. Air Products and
Performance |
| Timeline |
| Natural Health Trends |
| Air Products |
Natural Health and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and Air Products
The main advantage of trading using opposite Natural Health and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health 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.| Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc |
| Air Products vs. MINCO SILVER | Air Products vs. NorAm Drilling AS | Air Products vs. GRIFFIN MINING LTD | Air Products vs. International Consolidated Airlines |
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 CEOs Directory module to screen CEOs from public companies around the world.
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