Correlation Between Air Canada and INDIKA ENERGY
Can any of the company-specific risk be diversified away by investing in both Air Canada and INDIKA ENERGY 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 INDIKA ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and INDIKA ENERGY, you can compare the effects of market volatilities on Air Canada and INDIKA ENERGY 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 INDIKA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and INDIKA ENERGY.
Diversification Opportunities for Air Canada and INDIKA ENERGY
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and INDIKA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY 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 INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of Air Canada i.e., Air Canada and INDIKA ENERGY go up and down completely randomly.
Pair Corralation between Air Canada and INDIKA ENERGY
Assuming the 90 days trading horizon Air Canada is expected to generate 16.33 times more return on investment than INDIKA ENERGY. However, Air Canada is 16.33 times more volatile than INDIKA ENERGY. It trades about 0.33 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about -0.21 per unit of risk. If you would invest 1,267 in Air Canada on August 30, 2024 and sell it today you would earn a total of 385.00 from holding Air Canada or generate 30.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Air Canada vs. INDIKA ENERGY
Performance |
| Timeline |
| Air Canada |
| INDIKA ENERGY |
Air Canada and INDIKA ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and INDIKA ENERGY
The main advantage of trading using opposite Air Canada and INDIKA ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, INDIKA ENERGY 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 INDIKA ENERGY will offset losses from the drop in INDIKA ENERGY's long position.| Air Canada vs. Take Two Interactive Software | Air Canada vs. PennyMac Mortgage Investment | Air Canada vs. WisdomTree Investments | Air Canada vs. Check Point Software |
| INDIKA ENERGY vs. GALENA MINING LTD | INDIKA ENERGY vs. Micron Technology | INDIKA ENERGY vs. FANDIFI TECHNOLOGY P | INDIKA ENERGY vs. Perseus Mining Limited |
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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