Correlation Between Air France and Itissalat
Can any of the company-specific risk be diversified away by investing in both Air France and Itissalat 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 France and Itissalat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air France KLM SA and Itissalat Al Maghrib, you can compare the effects of market volatilities on Air France and Itissalat 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 France with a short position of Itissalat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air France and Itissalat.
Diversification Opportunities for Air France and Itissalat
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Itissalat is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM SA and Itissalat Al Maghrib in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itissalat Al Maghrib and Air France 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 France KLM SA are associated (or correlated) with Itissalat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itissalat Al Maghrib has no effect on the direction of Air France i.e., Air France and Itissalat go up and down completely randomly.
Pair Corralation between Air France and Itissalat
Assuming the 90 days horizon Air France KLM SA is expected to under-perform the Itissalat. In addition to that, Air France is 2.98 times more volatile than Itissalat Al Maghrib. It trades about -0.33 of its total potential returns per unit of risk. Itissalat Al Maghrib is currently generating about -0.23 per unit of volatility. If you would invest 830.00 in Itissalat Al Maghrib on August 31, 2024 and sell it today you would lose (40.00) from holding Itissalat Al Maghrib or give up 4.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air France KLM SA vs. Itissalat Al Maghrib
Performance |
| Timeline |
| Air France KLM |
| Itissalat Al Maghrib |
Air France and Itissalat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air France and Itissalat
The main advantage of trading using opposite Air France and Itissalat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air France position performs unexpectedly, Itissalat 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 Itissalat will offset losses from the drop in Itissalat's long position.| Air France vs. Manitou BF SA | Air France vs. Ossiam Minimum Variance | Air France vs. Granite 3x LVMH | Air France vs. 21Shares Polkadot ETP |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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