Correlation Between Air Canada and Cronos
Can any of the company-specific risk be diversified away by investing in both Air Canada and Cronos 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 Cronos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Cronos Group, you can compare the effects of market volatilities on Air Canada and Cronos 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 Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Cronos.
Diversification Opportunities for Air Canada and Cronos
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Cronos is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group 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 Cronos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos Group has no effect on the direction of Air Canada i.e., Air Canada and Cronos go up and down completely randomly.
Pair Corralation between Air Canada and Cronos
Assuming the 90 days horizon Air Canada is expected to generate 0.83 times more return on investment than Cronos. However, Air Canada is 1.21 times less risky than Cronos. It trades about 0.2 of its potential returns per unit of risk. Cronos Group is currently generating about -0.32 per unit of risk. If you would invest 2,340 in Air Canada on September 13, 2024 and sell it today you would earn a total of 165.00 from holding Air Canada or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. Cronos Group
Performance |
| Timeline |
| Air Canada |
| Cronos Group |
Air Canada and Cronos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Cronos
The main advantage of trading using opposite Air Canada and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Cronos 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 Cronos will offset losses from the drop in Cronos' long position.| Air Canada vs. Lycos Energy | Air Canada vs. Scandium Canada | Air Canada vs. Voice Mobility International | Air Canada vs. Martina Minerals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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