Correlation Between Air New and Step One
Can any of the company-specific risk be diversified away by investing in both Air New and Step One 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 Step One 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 Step One Clothing, you can compare the effects of market volatilities on Air New and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Step One.
Diversification Opportunities for Air New and Step One
Good diversification
The 3 months correlation between Air and Step is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Air New i.e., Air New and Step One go up and down completely randomly.
Pair Corralation between Air New and Step One
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.34 times more return on investment than Step One. However, Air New Zealand is 2.91 times less risky than Step One. It trades about 0.25 of its potential returns per unit of risk. Step One Clothing is currently generating about -0.06 per unit of risk. If you would invest 48.00 in Air New Zealand on September 15, 2024 and sell it today you would earn a total of 3.00 from holding Air New Zealand or generate 6.25% 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. Step One Clothing
Performance |
| Timeline |
| Air New Zealand |
| Step One Clothing |
Air New and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Step One
The main advantage of trading using opposite Air New and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| Air New vs. Dicker Data | Air New vs. Mirrabooka Investments | Air New vs. Australian Strategic Materials | Air New vs. Diversified United Investment |
| Step One vs. Wt Financial Group | Step One vs. Insignia Financial | Step One vs. EP Financial Group | Step One vs. National Australia Bank |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |