Correlation Between Air Canada and CEWE Stiftung

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Can any of the company-specific risk be diversified away by investing in both Air Canada and CEWE Stiftung 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 CEWE Stiftung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and CEWE Stiftung Co, you can compare the effects of market volatilities on Air Canada and CEWE Stiftung 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 CEWE Stiftung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and CEWE Stiftung.

Diversification Opportunities for Air Canada and CEWE Stiftung

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Air and CEWE is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and CEWE Stiftung Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEWE Stiftung 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 CEWE Stiftung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEWE Stiftung has no effect on the direction of Air Canada i.e., Air Canada and CEWE Stiftung go up and down completely randomly.

Pair Corralation between Air Canada and CEWE Stiftung

Assuming the 90 days trading horizon Air Canada is expected to generate 2.32 times more return on investment than CEWE Stiftung. However, Air Canada is 2.32 times more volatile than CEWE Stiftung Co. It trades about 0.3 of its potential returns per unit of risk. CEWE Stiftung Co is currently generating about -0.01 per unit of risk. If you would invest  1,040  in Air Canada on September 12, 2024 and sell it today you would earn a total of  664.00  from holding Air Canada or generate 63.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Air Canada  vs.  CEWE Stiftung Co

 Performance 
       Timeline  
Air Canada 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Air Canada are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Air Canada unveiled solid returns over the last few months and may actually be approaching a breakup point.
CEWE Stiftung 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CEWE Stiftung Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, CEWE Stiftung is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Air Canada and CEWE Stiftung Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air Canada and CEWE Stiftung

The main advantage of trading using opposite Air Canada and CEWE Stiftung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, CEWE Stiftung 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 CEWE Stiftung will offset losses from the drop in CEWE Stiftung's long position.
The idea behind Air Canada and CEWE Stiftung Co 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.
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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