Correlation Between Air Canada and Winpak
Can any of the company-specific risk be diversified away by investing in both Air Canada and Winpak 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 Winpak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Winpak, you can compare the effects of market volatilities on Air Canada and Winpak 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 Winpak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Winpak.
Diversification Opportunities for Air Canada and Winpak
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Winpak is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak 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 Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Air Canada i.e., Air Canada and Winpak go up and down completely randomly.
Pair Corralation between Air Canada and Winpak
Assuming the 90 days horizon Air Canada is expected to generate 2.14 times more return on investment than Winpak. However, Air Canada is 2.14 times more volatile than Winpak. It trades about 0.4 of its potential returns per unit of risk. Winpak is currently generating about -0.06 per unit of risk. If you would invest 1,887 in Air Canada on September 1, 2024 and sell it today you would earn a total of 609.00 from holding Air Canada or generate 32.27% 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. Winpak
Performance |
| Timeline |
| Air Canada |
| Winpak |
Air Canada and Winpak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Winpak
The main advantage of trading using opposite Air Canada and Winpak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Winpak 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 Winpak will offset losses from the drop in Winpak's long position.| Air Canada vs. Suncor Energy | Air Canada vs. Enbridge | Air Canada vs. Toronto Dominion Bank | Air Canada vs. iShares Canadian HYBrid |
| Winpak vs. Air Canada | Winpak vs. Wilmington Capital Management | Winpak vs. Altair Resources | Winpak vs. Dream Office Real |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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