Correlation Between Air Canada and METTLER TOLEDO
Can any of the company-specific risk be diversified away by investing in both Air Canada and METTLER TOLEDO 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 METTLER TOLEDO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and METTLER TOLEDO INTL, you can compare the effects of market volatilities on Air Canada and METTLER TOLEDO 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 METTLER TOLEDO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and METTLER TOLEDO.
Diversification Opportunities for Air Canada and METTLER TOLEDO
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and METTLER is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and METTLER TOLEDO INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METTLER TOLEDO INTL 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 METTLER TOLEDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METTLER TOLEDO INTL has no effect on the direction of Air Canada i.e., Air Canada and METTLER TOLEDO go up and down completely randomly.
Pair Corralation between Air Canada and METTLER TOLEDO
Assuming the 90 days trading horizon Air Canada is expected to generate 1.55 times more return on investment than METTLER TOLEDO. However, Air Canada is 1.55 times more volatile than METTLER TOLEDO INTL. It trades about 0.3 of its potential returns per unit of risk. METTLER TOLEDO INTL is currently generating about -0.08 per unit of risk. If you would invest 1,011 in Air Canada on September 3, 2024 and sell it today you would earn a total of 664.00 from holding Air Canada or generate 65.68% 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. METTLER TOLEDO INTL
Performance |
| Timeline |
| Air Canada |
| METTLER TOLEDO INTL |
Air Canada and METTLER TOLEDO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and METTLER TOLEDO
The main advantage of trading using opposite Air Canada and METTLER TOLEDO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, METTLER TOLEDO 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 METTLER TOLEDO will offset losses from the drop in METTLER TOLEDO's long position.The idea behind Air Canada and METTLER TOLEDO INTL 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.| METTLER TOLEDO vs. AAC TECHNOLOGHLDGADR | METTLER TOLEDO vs. Richardson Electronics | METTLER TOLEDO vs. Meiko Electronics Co | METTLER TOLEDO vs. Axcelis Technologies |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Global Correlations Find global opportunities by holding instruments from different markets |