Correlation Between Roebuck Food and Air Products

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Can any of the company-specific risk be diversified away by investing in both Roebuck Food 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 Roebuck Food and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roebuck Food Group and Air Products Chemicals, you can compare the effects of market volatilities on Roebuck Food 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 Roebuck Food with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roebuck Food and Air Products.

Diversification Opportunities for Roebuck Food and Air Products

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Roebuck and Air is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Roebuck Food Group and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Roebuck Food 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 Roebuck Food Group 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 Chemicals has no effect on the direction of Roebuck Food i.e., Roebuck Food and Air Products go up and down completely randomly.

Pair Corralation between Roebuck Food and Air Products

Assuming the 90 days trading horizon Roebuck Food Group is expected to generate 0.49 times more return on investment than Air Products. However, Roebuck Food Group is 2.05 times less risky than Air Products. It trades about 0.13 of its potential returns per unit of risk. Air Products Chemicals is currently generating about -0.57 per unit of risk. If you would invest  1,680  in Roebuck Food Group on October 8, 2024 and sell it today you would earn a total of  20.00  from holding Roebuck Food Group or generate 1.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy94.74%
ValuesDaily Returns

Roebuck Food Group  vs.  Air Products Chemicals

 Performance 
       Timeline  
Roebuck Food Group 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Roebuck Food Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Roebuck Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Air Products Chemicals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Roebuck Food and Air Products Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Roebuck Food and Air Products

The main advantage of trading using opposite Roebuck Food and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roebuck Food 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 Roebuck Food Group and Air Products Chemicals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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