Correlation Between Air Products and Corpay

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

Diversification Opportunities for Air Products and Corpay

0.68

Correlation Coefficient

Air Products  Corpay

Poor diversification

The 3 months correlation between Air and Corpay is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Corpay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corpay Inc 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 Corpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corpay Inc has no effect on the direction of Air Products i.e., Air Products and Corpay go up and down completely randomly.

Pair Corralation between Air Products and Corpay

Considering the 90-day investment horizon Air Products is expected to generate 13.94 times less return on investment than Corpay. In addition to that, Air Products is 1.01 times more volatile than Corpay Inc. It trades about 0.01 of its total potential returns per unit of risk. Corpay Inc is currently generating about 0.08 per unit of volatility. If you would invest  19,470  in Corpay Inc on October 4, 2024 and sell it today you would earn a total of  14,421  from holding Corpay Inc or generate 74.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Air Products and  vs.  Corpay Inc

Air Products

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Air Products and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Air Products is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Corpay Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corpay Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Corpay is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Air Products and Corpay

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

The idea behind Air Products and and Corpay Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.