Correlation Between Air Canada and Wacker Neuson
Can any of the company-specific risk be diversified away by investing in both Air Canada and Wacker Neuson 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 Wacker Neuson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Wacker Neuson SE, you can compare the effects of market volatilities on Air Canada and Wacker Neuson 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 Wacker Neuson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Wacker Neuson.
Diversification Opportunities for Air Canada and Wacker Neuson
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Wacker is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Wacker Neuson SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wacker Neuson SE 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 Wacker Neuson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wacker Neuson SE has no effect on the direction of Air Canada i.e., Air Canada and Wacker Neuson go up and down completely randomly.
Pair Corralation between Air Canada and Wacker Neuson
Assuming the 90 days trading horizon Air Canada is expected to generate 1.8 times more return on investment than Wacker Neuson. However, Air Canada is 1.8 times more volatile than Wacker Neuson SE. It trades about 0.33 of its potential returns per unit of risk. Wacker Neuson SE is currently generating about -0.24 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 | 100.0% |
| Values | Daily Returns |
Air Canada vs. Wacker Neuson SE
Performance |
| Timeline |
| Air Canada |
| Wacker Neuson SE |
Air Canada and Wacker Neuson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Wacker Neuson
The main advantage of trading using opposite Air Canada and Wacker Neuson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Wacker Neuson 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 Wacker Neuson will offset losses from the drop in Wacker Neuson'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 |
| Wacker Neuson vs. Harmony Gold Mining | Wacker Neuson vs. GRIFFIN MINING LTD | Wacker Neuson vs. Evolution Mining Limited | Wacker Neuson vs. ALERION CLEANPOWER |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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