Correlation Between Air Canada and Clarke
Can any of the company-specific risk be diversified away by investing in both Air Canada and Clarke 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 Clarke into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Clarke Inc, you can compare the effects of market volatilities on Air Canada and Clarke 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 Clarke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Clarke.
Diversification Opportunities for Air Canada and Clarke
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Clarke is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Clarke Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarke Inc 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 Clarke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarke Inc has no effect on the direction of Air Canada i.e., Air Canada and Clarke go up and down completely randomly.
Pair Corralation between Air Canada and Clarke
Assuming the 90 days horizon Air Canada is expected to under-perform the Clarke. In addition to that, Air Canada is 7.66 times more volatile than Clarke Inc. It trades about -0.1 of its total potential returns per unit of risk. Clarke Inc is currently generating about -0.12 per unit of volatility. If you would invest 2,380 in Clarke Inc on September 19, 2024 and sell it today you would lose (20.00) from holding Clarke Inc or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. Clarke Inc
Performance |
| Timeline |
| Air Canada |
| Clarke Inc |
Air Canada and Clarke Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Clarke
The main advantage of trading using opposite Air Canada and Clarke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Clarke 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 Clarke will offset losses from the drop in Clarke's long position.The idea behind Air Canada and Clarke Inc 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.| Clarke vs. Terravest Capital | Clarke vs. Clairvest Group | Clarke vs. Algoma Central | Clarke vs. Accord Financial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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