Correlation Between Air Products and Marstons PLC

Can any of the company-specific risk be diversified away by investing in both Air Products and Marstons PLC 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 Marstons PLC 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 Marstons PLC, you can compare the effects of market volatilities on Air Products and Marstons PLC 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 Marstons PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Marstons PLC.

Diversification Opportunities for Air Products and Marstons PLC

-0.45

Correlation Coefficient

Air Products  Marstons PLC

Very good diversification

The 3 months correlation between Air and Marstons is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC 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 Marstons PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marstons PLC has no effect on the direction of Air Products i.e., Air Products and Marstons PLC go up and down completely randomly.

Pair Corralation between Air Products and Marstons PLC

Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 2.19 times more return on investment than Marstons PLC. However, Air Products is 2.19 times more volatile than Marstons PLC. It trades about 0.02 of its potential returns per unit of risk. Marstons PLC is currently generating about 0.01 per unit of risk. If you would invest  30,952  in Air Products Chemicals on October 5, 2024 and sell it today you would lose (2,562) from holding Air Products Chemicals or give up 8.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Air Products Chemicals  vs.  Marstons PLC

Air Products Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Products Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Marstons PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marstons PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Marstons PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Air Products and Marstons PLC

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

The idea behind Air Products Chemicals and Marstons PLC 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..