Correlation Between Enter Air and Air New
Can any of the company-specific risk be diversified away by investing in both Enter Air and Air New 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 Enter Air and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enter Air SA and Air New Zealand, you can compare the effects of market volatilities on Enter Air and Air New 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 Enter Air with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enter Air and Air New.
Diversification Opportunities for Enter Air and Air New
Good diversification
The 3 months correlation between Enter and Air is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Enter Air SA and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and Enter Air 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 Enter Air SA are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Enter Air i.e., Enter Air and Air New go up and down completely randomly.
Pair Corralation between Enter Air and Air New
Assuming the 90 days trading horizon Enter Air SA is expected to generate 3.87 times more return on investment than Air New. However, Enter Air is 3.87 times more volatile than Air New Zealand. It trades about 0.07 of its potential returns per unit of risk. Air New Zealand is currently generating about 0.04 per unit of risk. If you would invest 859.00 in Enter Air SA on September 3, 2024 and sell it today you would earn a total of 353.00 from holding Enter Air SA or generate 41.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enter Air SA vs. Air New Zealand
Performance |
| Timeline |
| Enter Air SA |
| Air New Zealand |
Enter Air and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enter Air and Air New
The main advantage of trading using opposite Enter Air and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enter Air position performs unexpectedly, Air New 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 New will offset losses from the drop in Air New's long position.| Enter Air vs. Uber Technologies | Enter Air vs. Playtech plc | Enter Air vs. Hyatt Hotels | Enter Air vs. HYATT HOTELS A |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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