Correlation Between Air Canada and Arbor Metals
Can any of the company-specific risk be diversified away by investing in both Air Canada and Arbor Metals 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 Canada and Arbor Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Arbor Metals Corp, you can compare the effects of market volatilities on Air Canada and Arbor Metals 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 Canada with a short position of Arbor Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Arbor Metals.
Diversification Opportunities for Air Canada and Arbor Metals
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Arbor is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Arbor Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Metals Corp and Air Canada 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 Canada are associated (or correlated) with Arbor Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Metals Corp has no effect on the direction of Air Canada i.e., Air Canada and Arbor Metals go up and down completely randomly.
Pair Corralation between Air Canada and Arbor Metals
Assuming the 90 days horizon Air Canada is expected to generate 0.36 times more return on investment than Arbor Metals. However, Air Canada is 2.78 times less risky than Arbor Metals. It trades about 0.07 of its potential returns per unit of risk. Arbor Metals Corp is currently generating about -0.08 per unit of risk. If you would invest 1,797 in Air Canada on September 1, 2024 and sell it today you would earn a total of 699.00 from holding Air Canada or generate 38.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. Arbor Metals Corp
Performance |
| Timeline |
| Air Canada |
| Arbor Metals Corp |
Air Canada and Arbor Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Arbor Metals
The main advantage of trading using opposite Air Canada and Arbor Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Arbor Metals 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 Arbor Metals will offset losses from the drop in Arbor Metals' long position.| Air Canada vs. Suncor Energy | Air Canada vs. Enbridge | Air Canada vs. Toronto Dominion Bank | Air Canada vs. iShares Canadian HYBrid |
| Arbor Metals vs. Kiplin Metals | Arbor Metals vs. Pure Energy Minerals | Arbor Metals vs. Noram Lithium Corp | Arbor Metals vs. Minnova Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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