Correlation Between WD 40 and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both WD 40 and AIR PRODCHEMICALS 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 WD 40 and AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WD 40 CO and AIR PRODCHEMICALS, you can compare the effects of market volatilities on WD 40 and AIR PRODCHEMICALS 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 WD 40 with a short position of AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of WD 40 and AIR PRODCHEMICALS.
Diversification Opportunities for WD 40 and AIR PRODCHEMICALS
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WD1 and AIR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 CO and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and WD 40 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 WD 40 CO are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of WD 40 i.e., WD 40 and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between WD 40 and AIR PRODCHEMICALS
Assuming the 90 days trading horizon WD 40 CO is expected to generate 1.11 times more return on investment than AIR PRODCHEMICALS. However, WD 40 is 1.11 times more volatile than AIR PRODCHEMICALS. It trades about -0.48 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about -0.66 per unit of risk. If you would invest 27,200 in WD 40 CO on September 24, 2024 and sell it today you would lose (2,400) from holding WD 40 CO or give up 8.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
WD 40 CO vs. AIR PRODCHEMICALS
Performance |
Timeline |
WD 40 CO |
AIR PRODCHEMICALS |
WD 40 and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WD 40 and AIR PRODCHEMICALS
The main advantage of trading using opposite WD 40 and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WD 40 position performs unexpectedly, AIR PRODCHEMICALS 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 PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.WD 40 vs. AIR PRODCHEMICALS | WD 40 vs. Mitsui Chemicals | WD 40 vs. GEAR4MUSIC LS 10 | WD 40 vs. Microchip Technology Incorporated |
AIR PRODCHEMICALS vs. Sixt Leasing SE | AIR PRODCHEMICALS vs. DIVERSIFIED ROYALTY | AIR PRODCHEMICALS vs. United Rentals | AIR PRODCHEMICALS vs. HK Electric Investments |
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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