Correlation Between Air Canada and Kering SA
Can any of the company-specific risk be diversified away by investing in both Air Canada and Kering SA 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 Kering SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Kering SA, you can compare the effects of market volatilities on Air Canada and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Kering SA.
Diversification Opportunities for Air Canada and Kering SA
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Kering is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Air Canada i.e., Air Canada and Kering SA go up and down completely randomly.
Pair Corralation between Air Canada and Kering SA
Assuming the 90 days trading horizon Air Canada is expected to generate 1.52 times more return on investment than Kering SA. However, Air Canada is 1.52 times more volatile than Kering SA. It trades about 0.39 of its potential returns per unit of risk. Kering SA is currently generating about -0.05 per unit of risk. If you would invest 1,238 in Air Canada on September 2, 2024 and sell it today you would earn a total of 437.00 from holding Air Canada or generate 35.3% 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. Kering SA
Performance |
| Timeline |
| Air Canada |
| Kering SA |
Air Canada and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Kering SA
The main advantage of trading using opposite Air Canada and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.| Air Canada vs. X FAB Silicon Foundries | Air Canada vs. SMA Solar Technology | Air Canada vs. Computer And Technologies | Air Canada vs. DXC Technology Co |
| Kering SA vs. National Retail Properties | Kering SA vs. Caseys General Stores | Kering SA vs. British American Tobacco | Kering SA vs. NAKED WINES PLC |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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