Correlation Between Air Canada and Alta Copper
Can any of the company-specific risk be diversified away by investing in both Air Canada and Alta Copper 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 Alta Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Alta Copper Corp, you can compare the effects of market volatilities on Air Canada and Alta Copper 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 Alta Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Alta Copper.
Diversification Opportunities for Air Canada and Alta Copper
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Air and Alta is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Alta Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Copper 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 Alta Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Copper Corp has no effect on the direction of Air Canada i.e., Air Canada and Alta Copper go up and down completely randomly.
Pair Corralation between Air Canada and Alta Copper
Assuming the 90 days horizon Air Canada is expected to under-perform the Alta Copper. But the stock apears to be less risky and, when comparing its historical volatility, Air Canada is 2.48 times less risky than Alta Copper. The stock trades about -0.47 of its potential returns per unit of risk. The Alta Copper Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Alta Copper Corp on November 4, 2024 and sell it today you would lose (3.00) from holding Alta Copper Corp or give up 6.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. Alta Copper Corp
Performance |
| Timeline |
| Air Canada |
| Alta Copper Corp |
Air Canada and Alta Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Alta Copper
The main advantage of trading using opposite Air Canada and Alta Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Alta Copper 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 Alta Copper will offset losses from the drop in Alta Copper's long position.The idea behind Air Canada and Alta Copper Corp 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.| Alta Copper vs. Altair Resources | Alta Copper vs. Black Mammoth Metals | Alta Copper vs. Sun Peak Metals | Alta Copper vs. Questor Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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