Correlation Between Aeroports and Auckland International
Can any of the company-specific risk be diversified away by investing in both Aeroports and Auckland International 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 Aeroports and Auckland International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeroports de Paris and Auckland International Airport, you can compare the effects of market volatilities on Aeroports and Auckland International 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 Aeroports with a short position of Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeroports and Auckland International.
Diversification Opportunities for Aeroports and Auckland International
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aeroports and Auckland is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aeroports de Paris and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International and Aeroports 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 Aeroports de Paris are associated (or correlated) with Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Aeroports i.e., Aeroports and Auckland International go up and down completely randomly.
Pair Corralation between Aeroports and Auckland International
Assuming the 90 days horizon Aeroports de Paris is expected to generate 0.41 times more return on investment than Auckland International. However, Aeroports de Paris is 2.44 times less risky than Auckland International. It trades about -0.13 of its potential returns per unit of risk. Auckland International Airport is currently generating about -0.1 per unit of risk. If you would invest 11,981 in Aeroports de Paris on August 29, 2024 and sell it today you would lose (561.00) from holding Aeroports de Paris or give up 4.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeroports de Paris vs. Auckland International Airport
Performance |
| Timeline |
| Aeroports de Paris |
| Auckland International |
Aeroports and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeroports and Auckland International
The main advantage of trading using opposite Aeroports and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeroports position performs unexpectedly, Auckland International 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 Auckland International will offset losses from the drop in Auckland International's long position.| Aeroports vs. Auckland International Airport | Aeroports vs. Aena SME SA | Aeroports vs. Aena SME SA | Aeroports vs. Airports of Thailand |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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