Correlation Between Air Canada and Gitennes Exploration
Can any of the company-specific risk be diversified away by investing in both Air Canada and Gitennes 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 Gitennes 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 Gitennes Exploration, you can compare the effects of market volatilities on Air Canada and Gitennes 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 Gitennes Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Gitennes Exploration.
Diversification Opportunities for Air Canada and Gitennes Exploration
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Gitennes is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Gitennes Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gitennes 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 Gitennes Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gitennes Exploration has no effect on the direction of Air Canada i.e., Air Canada and Gitennes Exploration go up and down completely randomly.
Pair Corralation between Air Canada and Gitennes Exploration
Assuming the 90 days horizon Air Canada is expected to generate 10.07 times less return on investment than Gitennes Exploration. But when comparing it to its historical volatility, Air Canada is 6.96 times less risky than Gitennes Exploration. It trades about 0.2 of its potential returns per unit of risk. Gitennes Exploration is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Gitennes Exploration on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Gitennes Exploration or generate 80.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. Gitennes Exploration
Performance |
| Timeline |
| Air Canada |
| Gitennes Exploration |
Air Canada and Gitennes Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Gitennes Exploration
The main advantage of trading using opposite Air Canada and Gitennes Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Gitennes 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 Gitennes Exploration will offset losses from the drop in Gitennes Exploration's long position.| Air Canada vs. Lycos Energy | Air Canada vs. Scandium Canada | Air Canada vs. Voice Mobility International | Air Canada vs. Martina Minerals Corp |
| Gitennes Exploration vs. Air Canada | Gitennes Exploration vs. SPoT Coffee | Gitennes Exploration vs. Advent Wireless | Gitennes Exploration vs. Ramp Metals |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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