Correlation Between Air New and DY6 Metals
Can any of the company-specific risk be diversified away by investing in both Air New and DY6 Metals 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 New and DY6 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and DY6 Metals, you can compare the effects of market volatilities on Air New and DY6 Metals 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 New with a short position of DY6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and DY6 Metals.
Diversification Opportunities for Air New and DY6 Metals
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and DY6 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and DY6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DY6 Metals and Air New 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 New Zealand are associated (or correlated) with DY6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DY6 Metals has no effect on the direction of Air New i.e., Air New and DY6 Metals go up and down completely randomly.
Pair Corralation between Air New and DY6 Metals
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.28 times more return on investment than DY6 Metals. However, Air New Zealand is 3.62 times less risky than DY6 Metals. It trades about 0.05 of its potential returns per unit of risk. DY6 Metals is currently generating about -0.11 per unit of risk. If you would invest 47.00 in Air New Zealand on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Air New Zealand or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. DY6 Metals
Performance |
| Timeline |
| Air New Zealand |
| DY6 Metals |
Air New and DY6 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and DY6 Metals
The main advantage of trading using opposite Air New and DY6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, DY6 Metals 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 DY6 Metals will offset losses from the drop in DY6 Metals' long position.| Air New vs. Aneka Tambang Tbk | Air New vs. ANZ Group Holdings | Air New vs. Australia and New | Air New vs. Commonwealth Bank |
| DY6 Metals vs. Northern Star Resources | DY6 Metals vs. Evolution Mining | DY6 Metals vs. Bluescope Steel | DY6 Metals vs. Sandfire Resources NL |
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 .
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |