Correlation Between American Public and Air Canada
Can any of the company-specific risk be diversified away by investing in both American Public and Air Canada 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 American Public and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Public Education and Air Canada, you can compare the effects of market volatilities on American Public and Air Canada 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 American Public with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Air Canada.
Diversification Opportunities for American Public and Air Canada
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Air is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and American Public 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 American Public Education are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of American Public i.e., American Public and Air Canada go up and down completely randomly.
Pair Corralation between American Public and Air Canada
Assuming the 90 days horizon American Public Education is expected to generate 2.33 times more return on investment than Air Canada. However, American Public is 2.33 times more volatile than Air Canada. It trades about 0.05 of its potential returns per unit of risk. Air Canada is currently generating about 0.03 per unit of risk. If you would invest 1,180 in American Public Education on September 13, 2024 and sell it today you would earn a total of 800.00 from holding American Public Education or generate 67.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. Air Canada
Performance |
| Timeline |
| American Public Education |
| Air Canada |
American Public and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and Air Canada
The main advantage of trading using opposite American Public and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, Air Canada 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 Canada will offset losses from the drop in Air Canada's long position.| American Public vs. PLAYTIKA HOLDING DL 01 | American Public vs. NorAm Drilling AS | American Public vs. Major Drilling Group | American Public vs. CDL INVESTMENT |
| Air Canada vs. Check Point Software | Air Canada vs. American Public Education | Air Canada vs. Magic Software Enterprises | Air Canada vs. VITEC SOFTWARE GROUP |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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