Correlation Between Air New and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Air New and Sandfire Resources 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 Sandfire Resources 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 Sandfire Resources NL, you can compare the effects of market volatilities on Air New and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Sandfire Resources.
Diversification Opportunities for Air New and Sandfire Resources
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Sandfire is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Air New i.e., Air New and Sandfire Resources go up and down completely randomly.
Pair Corralation between Air New and Sandfire Resources
Assuming the 90 days trading horizon Air New is expected to generate 7.83 times less return on investment than Sandfire Resources. But when comparing it to its historical volatility, Air New Zealand is 1.56 times less risky than Sandfire Resources. It trades about 0.03 of its potential returns per unit of risk. Sandfire Resources NL is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 859.00 in Sandfire Resources NL on August 31, 2024 and sell it today you would earn a total of 175.00 from holding Sandfire Resources NL or generate 20.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Air New Zealand vs. Sandfire Resources NL
Performance |
| Timeline |
| Air New Zealand |
| Sandfire Resources |
Air New and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Sandfire Resources
The main advantage of trading using opposite Air New and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Air New vs. Aristocrat Leisure | Air New vs. MFF Capital Investments | Air New vs. Andean Silver Limited | Air New vs. Kingsrose Mining |
| Sandfire Resources vs. Aurelia Metals | Sandfire Resources vs. Step One Clothing | Sandfire Resources vs. Thorney Technologies | Sandfire Resources vs. Computershare |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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