Correlation Between Air New and Mirrabooka Investments

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Can any of the company-specific risk be diversified away by investing in both Air New and Mirrabooka Investments 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 Mirrabooka Investments 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 Mirrabooka Investments, you can compare the effects of market volatilities on Air New and Mirrabooka Investments 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 Mirrabooka Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Mirrabooka Investments.

Diversification Opportunities for Air New and Mirrabooka Investments

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Air and Mirrabooka is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Mirrabooka Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirrabooka Investments 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 Mirrabooka Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirrabooka Investments has no effect on the direction of Air New i.e., Air New and Mirrabooka Investments go up and down completely randomly.

Pair Corralation between Air New and Mirrabooka Investments

Assuming the 90 days trading horizon Air New Zealand is expected to generate 1.59 times more return on investment than Mirrabooka Investments. However, Air New is 1.59 times more volatile than Mirrabooka Investments. It trades about 0.15 of its potential returns per unit of risk. Mirrabooka Investments is currently generating about 0.05 per unit of risk. If you would invest  48.00  in Air New Zealand on August 29, 2024 and sell it today you would earn a total of  2.00  from holding Air New Zealand or generate 4.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Air New Zealand  vs.  Mirrabooka Investments

 Performance 
       Timeline  
Air New Zealand 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Air New Zealand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Air New is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Mirrabooka Investments 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Mirrabooka Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mirrabooka Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Air New and Mirrabooka Investments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air New and Mirrabooka Investments

The main advantage of trading using opposite Air New and Mirrabooka Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Mirrabooka Investments 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 Mirrabooka Investments will offset losses from the drop in Mirrabooka Investments' long position.
The idea behind Air New Zealand and Mirrabooka Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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