Correlation Between Airports and Auckland International
Can any of the company-specific risk be diversified away by investing in both Airports 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 Airports and Auckland International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airports of Thailand and Auckland International Airport, you can compare the effects of market volatilities on Airports 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 Airports with a short position of Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Auckland International.
Diversification Opportunities for Airports and Auckland International
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Airports and Auckland is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International and Airports 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 Airports of Thailand 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 Airports i.e., Airports and Auckland International go up and down completely randomly.
Pair Corralation between Airports and Auckland International
Assuming the 90 days horizon Airports of Thailand is expected to under-perform the Auckland International. In addition to that, Airports is 1.47 times more volatile than Auckland International Airport. It trades about -0.08 of its total potential returns per unit of risk. Auckland International Airport is currently generating about -0.03 per unit of volatility. If you would invest 2,171 in Auckland International Airport on August 28, 2024 and sell it today you would lose (60.00) from holding Auckland International Airport or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Auckland International Airport
Performance |
| Timeline |
| Airports of Thailand |
| Auckland International |
Airports and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Auckland International
The main advantage of trading using opposite Airports and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports 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.| Airports vs. Aeroports de Paris | Airports vs. Japan Airport Terminal | Airports vs. Aena SME SA | Airports vs. Aena SME SA |
| Auckland International vs. Aeroports de Paris | Auckland International vs. Aena SME SA | Auckland International vs. Aena SME SA | Auckland International 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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