Correlation Between Dragoneer Growth and Air Products

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

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

Diversification Opportunities for Dragoneer Growth and Air Products

-0.2

Correlation Coefficient

Dragoneer Growth  Air Products

Good diversification

The 3 months correlation between Dragoneer and Air is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dragoneer Growth Opportunities and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Dragoneer Growth 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 Dragoneer Growth Opportunities are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Dragoneer Growth i.e., Dragoneer Growth and Air Products go up and down completely randomly.

Pair Corralation between Dragoneer Growth and Air Products

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 Against
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Dragoneer Growth Opportunities  vs.  Air Products and

Dragoneer Growth Opp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dragoneer Growth Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dragoneer Growth is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Air Products

Risk-Adjusted Performance

0 of 100

Very 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.

Pair Trading with Dragoneer Growth and Air Products

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

The idea behind Dragoneer Growth Opportunities and Air Products and 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.