Correlation Between Air Canada and Fjordland Exploration
Can any of the company-specific risk be diversified away by investing in both Air Canada and Fjordland Exploration 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 Fjordland Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Fjordland Exploration, you can compare the effects of market volatilities on Air Canada and Fjordland Exploration 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 Fjordland Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Fjordland Exploration.
Diversification Opportunities for Air Canada and Fjordland Exploration
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Fjordland is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Fjordland Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fjordland Exploration 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 Fjordland Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fjordland Exploration has no effect on the direction of Air Canada i.e., Air Canada and Fjordland Exploration go up and down completely randomly.
Pair Corralation between Air Canada and Fjordland Exploration
Assuming the 90 days horizon Air Canada is expected to generate 0.17 times more return on investment than Fjordland Exploration. However, Air Canada is 5.8 times less risky than Fjordland Exploration. It trades about 0.33 of its potential returns per unit of risk. Fjordland Exploration is currently generating about -0.21 per unit of risk. If you would invest 2,174 in Air Canada on September 5, 2024 and sell it today you would earn a total of 316.00 from holding Air Canada or generate 14.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Air Canada vs. Fjordland Exploration
Performance |
| Timeline |
| Air Canada |
| Fjordland Exploration |
Air Canada and Fjordland Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Fjordland Exploration
The main advantage of trading using opposite Air Canada and Fjordland Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Fjordland Exploration 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 Fjordland Exploration will offset losses from the drop in Fjordland Exploration's long position.The idea behind Air Canada and Fjordland Exploration 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.| Fjordland Exploration vs. Reliq Health Technologies | Fjordland Exploration vs. Air Canada | Fjordland Exploration vs. Evertz Technologies Limited | Fjordland Exploration vs. Northstar Clean Technologies |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |