Correlation Between KAUFMAN ET and Air Transport
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET 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 KAUFMAN ET and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and Air Transport Services, you can compare the effects of market volatilities on KAUFMAN ET 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 KAUFMAN ET with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Air Transport.
Diversification Opportunities for KAUFMAN ET and Air Transport
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KAUFMAN and Air is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD 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 KAUFMAN ET 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 KAUFMAN ET BROAD 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 KAUFMAN ET i.e., KAUFMAN ET and Air Transport go up and down completely randomly.
Pair Corralation between KAUFMAN ET and Air Transport
Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to generate 0.63 times more return on investment than Air Transport. However, KAUFMAN ET BROAD is 1.58 times less risky than Air Transport. It trades about 0.05 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.0 per unit of risk. If you would invest 2,271 in KAUFMAN ET BROAD on August 26, 2024 and sell it today you would earn a total of 939.00 from holding KAUFMAN ET BROAD or generate 41.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. Air Transport Services
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| Air Transport Services |
KAUFMAN ET and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and Air Transport
The main advantage of trading using opposite KAUFMAN ET and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET 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.The idea behind KAUFMAN ET BROAD and Air Transport Services 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.| Air Transport vs. OURGAME INTHOLDL 00005 | Air Transport vs. Penn National Gaming | Air Transport vs. Games Workshop Group | Air Transport vs. PENN NATL GAMING |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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