Correlation Between Apple and Air Canada
Can any of the company-specific risk be diversified away by investing in both Apple and Air Canada 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 Apple and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Air Canada, you can compare the effects of market volatilities on Apple and Air Canada 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 Apple with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Air Canada.
Diversification Opportunities for Apple and Air Canada
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Air is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Apple 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 Apple Inc are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Apple i.e., Apple and Air Canada go up and down completely randomly.
Pair Corralation between Apple and Air Canada
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.69 times more return on investment than Air Canada. However, Apple Inc is 1.46 times less risky than Air Canada. It trades about 0.05 of its potential returns per unit of risk. Air Canada is currently generating about 0.01 per unit of risk. If you would invest 17,498 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 4,637 from holding Apple Inc or generate 26.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Air Canada
Performance |
| Timeline |
| Apple Inc |
| Air Canada |
Apple and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Air Canada
The main advantage of trading using opposite Apple and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| Apple vs. Nordic Semiconductor ASA | Apple vs. Altair Engineering | Apple vs. FORWARD AIR P | Apple vs. Westinghouse Air Brake |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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