Correlation Between Air Transport and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Air Transport and International Consolidated 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 Transport and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and International Consolidated Airlines, you can compare the effects of market volatilities on Air Transport and International Consolidated 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 Transport with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and International Consolidated.
Diversification Opportunities for Air Transport and International Consolidated
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and International is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Air Transport 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 Transport Services are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Air Transport i.e., Air Transport and International Consolidated go up and down completely randomly.
Pair Corralation between Air Transport and International Consolidated
Given the investment horizon of 90 days Air Transport is expected to generate 1.08 times less return on investment than International Consolidated. But when comparing it to its historical volatility, Air Transport Services is 1.4 times less risky than International Consolidated. It trades about 0.12 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 205.00 in International Consolidated Airlines on August 24, 2024 and sell it today you would earn a total of 115.00 from holding International Consolidated Airlines or generate 56.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Air Transport Services vs. International Consolidated Air
Performance |
| Timeline |
| Air Transport Services |
| International Consolidated |
Air Transport and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and International Consolidated
The main advantage of trading using opposite Air Transport and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| International Consolidated vs. Deutsche Lufthansa AG | International Consolidated vs. Air France KLM | International Consolidated vs. Singapore Airlines | International Consolidated vs. Sun Country Airlines |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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