Correlation Between Air New and Sky Metals
Can any of the company-specific risk be diversified away by investing in both Air New and Sky 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 Sky 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 Sky Metals, you can compare the effects of market volatilities on Air New and Sky 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 Sky Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Sky Metals.
Diversification Opportunities for Air New and Sky Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Sky is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Sky Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky 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 Sky Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Metals has no effect on the direction of Air New i.e., Air New and Sky Metals go up and down completely randomly.
Pair Corralation between Air New and Sky Metals
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.48 times more return on investment than Sky Metals. However, Air New Zealand is 2.09 times less risky than Sky Metals. It trades about -0.11 of its potential returns per unit of risk. Sky Metals is currently generating about -0.08 per unit of risk. If you would invest 56.00 in Air New Zealand on November 27, 2024 and sell it today you would lose (2.00) from holding Air New Zealand or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Sky Metals
Performance |
| Timeline |
| Air New Zealand |
| Sky Metals |
Air New and Sky Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Sky Metals
The main advantage of trading using opposite Air New and Sky Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Sky 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 Sky Metals will offset losses from the drop in Sky Metals' long position.| Air New vs. ARN Media Limited | Air New vs. Aurelia Metals | Air New vs. Truscott Mining Corp | Air New vs. COAST ENTERTAINMENT HOLDINGS |
| Sky Metals vs. Lunnon Metals | Sky Metals vs. Air New Zealand | Sky Metals vs. ACDC Metals | Sky Metals vs. Neurotech International |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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