Correlation Between Air Products and Bellevue Healthcare

Can any of the company-specific risk be diversified away by investing in both Air Products and Bellevue Healthcare 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 Air Products and Bellevue Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Products Chemicals and Bellevue Healthcare Trust, you can compare the effects of market volatilities on Air Products and Bellevue Healthcare 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 Air Products with a short position of Bellevue Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Bellevue Healthcare.

Diversification Opportunities for Air Products and Bellevue Healthcare

-0.72

Correlation Coefficient

Air Products  Bellevue Healthcare

Pay attention - limited upside

The 3 months correlation between Air and Bellevue is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Bellevue Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Healthcare Trust and Air Products 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 Air Products Chemicals are associated (or correlated) with Bellevue Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Healthcare Trust has no effect on the direction of Air Products i.e., Air Products and Bellevue Healthcare go up and down completely randomly.

Pair Corralation between Air Products and Bellevue Healthcare

Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 4.03 times more return on investment than Bellevue Healthcare. However, Air Products is 4.03 times more volatile than Bellevue Healthcare Trust. It trades about 0.02 of its potential returns per unit of risk. Bellevue Healthcare Trust is currently generating about 0.0 per unit of risk. If you would invest  30,809  in Air Products Chemicals on September 3, 2024 and sell it today you would earn a total of  2,420  from holding Air Products Chemicals or generate 7.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Air Products Chemicals  vs.  Bellevue Healthcare Trust

Air Products Chemicals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products Chemicals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Air Products unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bellevue Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Air Products and Bellevue Healthcare

The main advantage of trading using opposite Air Products and Bellevue Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Bellevue Healthcare 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 Bellevue Healthcare will offset losses from the drop in Bellevue Healthcare's long position.

The idea behind Air Products Chemicals and Bellevue Healthcare Trust 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.