Correlation Between Air New and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both Air New and Patriot Battery 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 Patriot Battery 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 Patriot Battery Metals, you can compare the effects of market volatilities on Air New and Patriot Battery 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 Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Patriot Battery.
Diversification Opportunities for Air New and Patriot Battery
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Patriot is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Air New i.e., Air New and Patriot Battery go up and down completely randomly.
Pair Corralation between Air New and Patriot Battery
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.24 times more return on investment than Patriot Battery. However, Air New Zealand is 4.09 times less risky than Patriot Battery. It trades about 0.01 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.34 per unit of risk. If you would invest 48.00 in Air New Zealand on August 26, 2024 and sell it today you would earn a total of 0.00 from holding Air New Zealand or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Patriot Battery Metals
Performance |
| Timeline |
| Air New Zealand |
| Patriot Battery Metals |
Air New and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Patriot Battery
The main advantage of trading using opposite Air New and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| Air New vs. Singular Health Group | Air New vs. Richmond Vanadium Technology | Air New vs. Global Health | Air New vs. Macquarie Technology Group |
| Patriot Battery vs. Air New Zealand | Patriot Battery vs. Stelar Metals | Patriot Battery vs. Aeon Metals | Patriot Battery vs. Alto Metals |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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