Correlation Between TRON and Air Products
Can any of the company-specific risk be diversified away by investing in both TRON 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 TRON and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and Air Products and, you can compare the effects of market volatilities on TRON 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 TRON with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and Air Products.
Diversification Opportunities for TRON and Air Products
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TRON and Air is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and TRON 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 TRON 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 TRON i.e., TRON and Air Products go up and down completely randomly.
Pair Corralation between TRON and Air Products
Assuming the 90 days trading horizon TRON is expected to generate 5.08 times more return on investment than Air Products. However, TRON is 5.08 times more volatile than Air Products and. It trades about 0.09 of its potential returns per unit of risk. Air Products and is currently generating about 0.03 per unit of risk. If you would invest 6.02 in TRON on October 12, 2024 and sell it today you would earn a total of 17.98 from holding TRON or generate 298.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 60.61% |
| Values | Daily Returns |
TRON vs. Air Products and
Performance |
| Timeline |
| TRON |
| Air Products |
TRON and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and Air Products
The main advantage of trading using opposite TRON and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON 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.The idea behind TRON and Air Products and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Air Products vs. Pure Storage, | Air Products vs. HCA Healthcare, | Air Products vs. Clover Health Investments, | Air Products vs. Cardinal Health, |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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