Correlation Between Air Canada and STRAX AB
Can any of the company-specific risk be diversified away by investing in both Air Canada and STRAX AB 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 STRAX AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and STRAX AB SK, you can compare the effects of market volatilities on Air Canada and STRAX AB 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 STRAX AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and STRAX AB.
Diversification Opportunities for Air Canada and STRAX AB
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and STRAX is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and STRAX AB SK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAX AB SK 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 STRAX AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAX AB SK has no effect on the direction of Air Canada i.e., Air Canada and STRAX AB go up and down completely randomly.
Pair Corralation between Air Canada and STRAX AB
Assuming the 90 days trading horizon Air Canada is expected to under-perform the STRAX AB. But the stock apears to be less risky and, when comparing its historical volatility, Air Canada is 6.41 times less risky than STRAX AB. The stock trades about -0.18 of its potential returns per unit of risk. The STRAX AB SK is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 0.92 in STRAX AB SK on October 20, 2024 and sell it today you would lose (0.04) from holding STRAX AB SK or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. STRAX AB SK
Performance |
| Timeline |
| Air Canada |
| STRAX AB SK |
Air Canada and STRAX AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and STRAX AB
The main advantage of trading using opposite Air Canada and STRAX AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, STRAX AB 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 STRAX AB will offset losses from the drop in STRAX AB's long position.The idea behind Air Canada and STRAX AB SK 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.| STRAX AB vs. Monument Mining Limited | STRAX AB vs. PICKN PAY STORES | STRAX AB vs. FAST RETAIL ADR | STRAX AB vs. MARKET VECTR RETAIL |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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