Correlation Between Air Canada and BANK HANDLOWY
Can any of the company-specific risk be diversified away by investing in both Air Canada and BANK HANDLOWY 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 BANK HANDLOWY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and BANK HANDLOWY, you can compare the effects of market volatilities on Air Canada and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and BANK HANDLOWY.
Diversification Opportunities for Air Canada and BANK HANDLOWY
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and BANK is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Air Canada i.e., Air Canada and BANK HANDLOWY go up and down completely randomly.
Pair Corralation between Air Canada and BANK HANDLOWY
Assuming the 90 days trading horizon Air Canada is expected to generate 8.74 times more return on investment than BANK HANDLOWY. However, Air Canada is 8.74 times more volatile than BANK HANDLOWY. It trades about 0.34 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about -0.36 per unit of risk. If you would invest 1,273 in Air Canada on August 27, 2024 and sell it today you would earn a total of 377.00 from holding Air Canada or generate 29.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. BANK HANDLOWY
Performance |
| Timeline |
| Air Canada |
| BANK HANDLOWY |
Air Canada and BANK HANDLOWY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and BANK HANDLOWY
The main advantage of trading using opposite Air Canada and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.The idea behind Air Canada and BANK HANDLOWY 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.| BANK HANDLOWY vs. TIANDE CHEMICAL | BANK HANDLOWY vs. ECHO INVESTMENT ZY | BANK HANDLOWY vs. MGIC INVESTMENT | BANK HANDLOWY vs. Marie Brizard Wine |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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