Correlation Between Polar Capital and Air Products
Can any of the company-specific risk be diversified away by investing in both Polar Capital 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 Polar Capital and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polar Capital Technology and Air Products Chemicals, you can compare the effects of market volatilities on Polar Capital 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 Polar Capital with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Air Products.
Diversification Opportunities for Polar Capital and Air Products
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Polar and Air is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology 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 Polar Capital 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 Polar Capital Technology 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 Polar Capital i.e., Polar Capital and Air Products go up and down completely randomly.
Pair Corralation between Polar Capital and Air Products
Assuming the 90 days trading horizon Polar Capital is expected to generate 17.43 times less return on investment than Air Products. In addition to that, Polar Capital is 1.51 times more volatile than Air Products Chemicals. It trades about 0.02 of its total potential returns per unit of risk. Air Products Chemicals is currently generating about 0.6 per unit of volatility. If you would invest 28,245 in Air Products Chemicals on November 6, 2024 and sell it today you would earn a total of 5,335 from holding Air Products Chemicals or generate 18.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Air Products Chemicals
Performance |
| Timeline |
| Polar Capital Technology |
| Air Products Chemicals |
Polar Capital and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Air Products
The main advantage of trading using opposite Polar Capital and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital 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.| Polar Capital vs. Diversified Energy | Polar Capital vs. Rheinmetall AG | Polar Capital vs. Wheaton Precious Metals | Polar Capital vs. Fulcrum Metals PLC |
| Air Products vs. Pets at Home | Air Products vs. American Homes 4 | Air Products vs. Commerzbank AG | Air Products vs. MoneysupermarketCom Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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