Correlation Between Air Canada and Ucore Rare
Can any of the company-specific risk be diversified away by investing in both Air Canada and Ucore Rare 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 Ucore Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Ucore Rare Metals, you can compare the effects of market volatilities on Air Canada and Ucore Rare 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 Ucore Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Ucore Rare.
Diversification Opportunities for Air Canada and Ucore Rare
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and Ucore is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Ucore Rare Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ucore Rare Metals 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 Ucore Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ucore Rare Metals has no effect on the direction of Air Canada i.e., Air Canada and Ucore Rare go up and down completely randomly.
Pair Corralation between Air Canada and Ucore Rare
Assuming the 90 days horizon Air Canada is expected to under-perform the Ucore Rare. But the stock apears to be less risky and, when comparing its historical volatility, Air Canada is 4.84 times less risky than Ucore Rare. The stock trades about -0.41 of its potential returns per unit of risk. The Ucore Rare Metals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 61.00 in Ucore Rare Metals on October 30, 2024 and sell it today you would earn a total of 11.00 from holding Ucore Rare Metals or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Air Canada vs. Ucore Rare Metals
Performance |
| Timeline |
| Air Canada |
| Ucore Rare Metals |
Air Canada and Ucore Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Ucore Rare
The main advantage of trading using opposite Air Canada and Ucore Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Ucore Rare 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 Ucore Rare will offset losses from the drop in Ucore Rare's long position.The idea behind Air Canada and Ucore Rare Metals 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.| Ucore Rare vs. High Liner Foods | Ucore Rare vs. Quipt Home Medical | Ucore Rare vs. Altair Resources | Ucore Rare vs. Diversified Royalty 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |