Correlation Between SM Investments and Air Products
Can any of the company-specific risk be diversified away by investing in both SM 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 SM 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 SM Investments and Air Products and, you can compare the effects of market volatilities on SM 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 SM Investments with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Air Products.
Diversification Opportunities for SM Investments and Air Products
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between SVTMF and Air is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and SM 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 SM Investments 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 SM Investments i.e., SM Investments and Air Products go up and down completely randomly.
Pair Corralation between SM Investments and Air Products
If you would invest 28,525 in Air Products and on November 9, 2024 and sell it today you would earn a total of 4,288 from holding Air Products and or generate 15.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Investments vs. Air Products and
Performance |
| Timeline |
| SM Investments |
| Air Products |
SM Investments and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Investments and Air Products
The main advantage of trading using opposite SM Investments and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM 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.| SM Investments vs. Jerash Holdings | SM Investments vs. Lizhan Environmental | SM Investments vs. Grupo Simec SAB | SM Investments vs. Boot Barn Holdings |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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