Correlation Between Air Products and Chubb
Can any of the company-specific risk be diversified away by investing in both Air Products and Chubb 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 Chubb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Chubb, you can compare the effects of market volatilities on Air Products and Chubb 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 Chubb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Chubb.
Diversification Opportunities for Air Products and Chubb
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Chubb is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Chubb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chubb 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 and are associated (or correlated) with Chubb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chubb has no effect on the direction of Air Products i.e., Air Products and Chubb go up and down completely randomly.
Pair Corralation between Air Products and Chubb
Considering the 90-day investment horizon Air Products and is expected to generate 1.52 times more return on investment than Chubb. However, Air Products is 1.52 times more volatile than Chubb. It trades about 0.09 of its potential returns per unit of risk. Chubb is currently generating about 0.07 per unit of risk. If you would invest 24,587 in Air Products and on September 29, 2024 and sell it today you would earn a total of 4,694 from holding Air Products and or generate 19.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Air Products and vs. Chubb
Performance |
Timeline |
Air Products |
Chubb |
Air Products and Chubb Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air Products and Chubb
The main advantage of trading using opposite Air Products and Chubb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Chubb 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 Chubb will offset losses from the drop in Chubb's long position.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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