Correlation Between Air Canada and Quipt Home
Can any of the company-specific risk be diversified away by investing in both Air Canada and Quipt Home 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 Quipt Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Quipt Home Medical, you can compare the effects of market volatilities on Air Canada and Quipt Home 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 Quipt Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Quipt Home.
Diversification Opportunities for Air Canada and Quipt Home
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Quipt is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Quipt Home Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quipt Home Medical 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 Quipt Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quipt Home Medical has no effect on the direction of Air Canada i.e., Air Canada and Quipt Home go up and down completely randomly.
Pair Corralation between Air Canada and Quipt Home
Assuming the 90 days horizon Air Canada is expected to generate 1.33 times more return on investment than Quipt Home. However, Air Canada is 1.33 times more volatile than Quipt Home Medical. It trades about 0.36 of its potential returns per unit of risk. Quipt Home Medical is currently generating about -0.07 per unit of risk. If you would invest 1,918 in Air Canada on August 31, 2024 and sell it today you would earn a total of 564.00 from holding Air Canada or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. Quipt Home Medical
Performance |
| Timeline |
| Air Canada |
| Quipt Home Medical |
Air Canada and Quipt Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Quipt Home
The main advantage of trading using opposite Air Canada and Quipt Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Quipt Home 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 Quipt Home will offset losses from the drop in Quipt Home's long position.The idea behind Air Canada and Quipt Home Medical 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.| Quipt Home vs. iShares Canadian HYBrid | Quipt Home vs. Brompton European Dividend | Quipt Home vs. Solar Alliance Energy | Quipt Home vs. PHN Multi Style All Cap |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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