Correlation Between FactSet Research and Air Products

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

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

Diversification Opportunities for FactSet Research and Air Products

0.15

Correlation Coefficient

FactSet Research  Air Products

Average diversification

The 3 months correlation between FactSet and Air is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and FactSet Research 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 FactSet Research Systems 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 FactSet Research i.e., FactSet Research and Air Products go up and down completely randomly.

Pair Corralation between FactSet Research and Air Products

Considering the 90-day investment horizon FactSet Research Systems is expected to generate 1.41 times more return on investment than Air Products. However, FactSet Research is 1.41 times more volatile than Air Products and. It trades about -0.03 of its potential returns per unit of risk. Air Products and is currently generating about -0.68 per unit of risk. If you would invest  48,552  in FactSet Research Systems on October 4, 2024 and sell it today you would lose (524.00) from holding FactSet Research Systems or give up 1.08% of portfolio value over 90 days.

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

FactSet Research Systems  vs.  Air Products and

FactSet Research Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, FactSet Research is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Air Products

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 FactSet Research and Air Products

The main advantage of trading using opposite FactSet Research and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FactSet Research 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 FactSet Research Systems 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.