Correlation Between Air France and Azul SA
Can any of the company-specific risk be diversified away by investing in both Air France and Azul 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 France and Azul SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air France KLM and Azul SA, you can compare the effects of market volatilities on Air France and Azul 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 France with a short position of Azul SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air France and Azul SA.
Diversification Opportunities for Air France and Azul SA
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Air and Azul is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM and Azul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azul SA 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 are associated (or correlated) with Azul SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azul SA has no effect on the direction of Air France i.e., Air France and Azul SA go up and down completely randomly.
Pair Corralation between Air France and Azul SA
Assuming the 90 days horizon Air France KLM is expected to generate 0.52 times more return on investment than Azul SA. However, Air France KLM is 1.92 times less risky than Azul SA. It trades about -0.05 of its potential returns per unit of risk. Azul SA is currently generating about -0.07 per unit of risk. If you would invest 131.00 in Air France KLM on November 9, 2024 and sell it today you would lose (49.00) from holding Air France KLM or give up 37.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air France KLM vs. Azul SA
Performance |
| Timeline |
| Air France KLM |
| Azul SA |
Air France and Azul SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air France and Azul SA
The main advantage of trading using opposite Air France and Azul SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air France position performs unexpectedly, Azul 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 Azul SA will offset losses from the drop in Azul SA's long position.| Air France vs. International Consolidated Airlines | Air France vs. Air France KLM SA | Air France vs. Finnair Oyj | Air France vs. AirAsia Group Berhad |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |