Correlation Between Air Canada and Fiskars Oyj
Can any of the company-specific risk be diversified away by investing in both Air Canada and Fiskars Oyj 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 Fiskars Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Fiskars Oyj Abp, you can compare the effects of market volatilities on Air Canada and Fiskars Oyj 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 Fiskars Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Fiskars Oyj.
Diversification Opportunities for Air Canada and Fiskars Oyj
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Fiskars is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Fiskars Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiskars Oyj Abp 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 Fiskars Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiskars Oyj Abp has no effect on the direction of Air Canada i.e., Air Canada and Fiskars Oyj go up and down completely randomly.
Pair Corralation between Air Canada and Fiskars Oyj
Assuming the 90 days trading horizon Air Canada is expected to generate 1.34 times more return on investment than Fiskars Oyj. However, Air Canada is 1.34 times more volatile than Fiskars Oyj Abp. It trades about 0.03 of its potential returns per unit of risk. Fiskars Oyj Abp is currently generating about 0.01 per unit of risk. If you would invest 1,317 in Air Canada on September 3, 2024 and sell it today you would earn a total of 358.00 from holding Air Canada or generate 27.18% 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. Fiskars Oyj Abp
Performance |
| Timeline |
| Air Canada |
| Fiskars Oyj Abp |
Air Canada and Fiskars Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Fiskars Oyj
The main advantage of trading using opposite Air Canada and Fiskars Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Fiskars Oyj 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 Fiskars Oyj will offset losses from the drop in Fiskars Oyj's long position.The idea behind Air Canada and Fiskars Oyj Abp 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.| Fiskars Oyj vs. Sunny Optical Technology | Fiskars Oyj vs. SMA Solar Technology | Fiskars Oyj vs. FANDIFI TECHNOLOGY P | Fiskars Oyj vs. National Health Investors |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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