Correlation Between Medtronic PLC and Air Transport
Can any of the company-specific risk be diversified away by investing in both Medtronic PLC and Air Transport 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 Medtronic PLC and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medtronic PLC and Air Transport Services, you can compare the effects of market volatilities on Medtronic PLC and Air Transport 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 Medtronic PLC with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medtronic PLC and Air Transport.
Diversification Opportunities for Medtronic PLC and Air Transport
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Medtronic and Air is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic PLC and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and Medtronic PLC 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 Medtronic PLC are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Medtronic PLC i.e., Medtronic PLC and Air Transport go up and down completely randomly.
Pair Corralation between Medtronic PLC and Air Transport
Assuming the 90 days trading horizon Medtronic PLC is expected to under-perform the Air Transport. In addition to that, Medtronic PLC is 1.94 times more volatile than Air Transport Services. It trades about -0.14 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.15 per unit of volatility. If you would invest 2,060 in Air Transport Services on September 13, 2024 and sell it today you would earn a total of 40.00 from holding Air Transport Services or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Medtronic PLC vs. Air Transport Services
Performance |
| Timeline |
| Medtronic PLC |
| Air Transport Services |
Medtronic PLC and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medtronic PLC and Air Transport
The main advantage of trading using opposite Medtronic PLC and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medtronic PLC position performs unexpectedly, Air Transport 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 Transport will offset losses from the drop in Air Transport's long position.| Medtronic PLC vs. Coeur Mining | Medtronic PLC vs. United Rentals | Medtronic PLC vs. Zijin Mining Group | Medtronic PLC vs. MINCO SILVER |
| Air Transport vs. Aena SME SA | Air Transport vs. Superior Plus Corp | Air Transport vs. SIVERS SEMICONDUCTORS AB | Air Transport vs. Norsk Hydro ASA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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