Correlation Between Air Canada and Oculus VisionTech
Can any of the company-specific risk be diversified away by investing in both Air Canada and Oculus VisionTech 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 Oculus VisionTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Oculus VisionTech, you can compare the effects of market volatilities on Air Canada and Oculus VisionTech 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 Oculus VisionTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Oculus VisionTech.
Diversification Opportunities for Air Canada and Oculus VisionTech
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Oculus is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Oculus VisionTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oculus VisionTech 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 Oculus VisionTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oculus VisionTech has no effect on the direction of Air Canada i.e., Air Canada and Oculus VisionTech go up and down completely randomly.
Pair Corralation between Air Canada and Oculus VisionTech
Assuming the 90 days horizon Air Canada is expected to generate 6.86 times less return on investment than Oculus VisionTech. But when comparing it to its historical volatility, Air Canada is 4.82 times less risky than Oculus VisionTech. It trades about 0.03 of its potential returns per unit of risk. Oculus VisionTech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Oculus VisionTech on August 31, 2024 and sell it today you would lose (2.00) from holding Oculus VisionTech or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. Oculus VisionTech
Performance |
| Timeline |
| Air Canada |
| Oculus VisionTech |
Air Canada and Oculus VisionTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Oculus VisionTech
The main advantage of trading using opposite Air Canada and Oculus VisionTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Oculus VisionTech 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 Oculus VisionTech will offset losses from the drop in Oculus VisionTech's long position.The idea behind Air Canada and Oculus VisionTech 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.| Oculus VisionTech vs. Mene Inc | Oculus VisionTech vs. Africa Oil Corp | Oculus VisionTech vs. Financial 15 Split | Oculus VisionTech vs. Rubicon Organics |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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