Correlation Between Air Products and Broadcom

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

Diversification Opportunities for Air Products and Broadcom

0.59

Correlation Coefficient

Air Products  Broadcom

Very weak diversification

The 3 months correlation between Air and Broadcom is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom 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 Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of Air Products i.e., Air Products and Broadcom go up and down completely randomly.

Pair Corralation between Air Products and Broadcom

Assuming the 90 days trading horizon Air Products is expected to generate 4.56 times less return on investment than Broadcom. But when comparing it to its historical volatility, Air Products and is 2.86 times less risky than Broadcom. It trades about 0.18 of its potential returns per unit of risk. Broadcom is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,517  in Broadcom on April 24, 2025 and sell it today you would earn a total of  697.00  from holding Broadcom or generate 45.95% 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.  Broadcom

Air Products

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Air Products may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Broadcom

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Broadcom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Products and Broadcom

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

The idea behind Air Products and and Broadcom 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.