Correlation Between Air Transport and BEST
Can any of the company-specific risk be diversified away by investing in both Air Transport and BEST 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 BEST 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 BEST Inc, you can compare the effects of market volatilities on Air Transport and BEST 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 BEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and BEST.
Diversification Opportunities for Air Transport and BEST
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and BEST is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and BEST Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEST Inc 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 BEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEST Inc has no effect on the direction of Air Transport i.e., Air Transport and BEST go up and down completely randomly.
Pair Corralation between Air Transport and BEST
Given the investment horizon of 90 days Air Transport Services is expected to generate 10.14 times more return on investment than BEST. However, Air Transport is 10.14 times more volatile than BEST Inc. It trades about 0.15 of its potential returns per unit of risk. BEST Inc is currently generating about -0.14 per unit of risk. If you would invest 1,569 in Air Transport Services on August 31, 2024 and sell it today you would earn a total of 630.00 from holding Air Transport Services or generate 40.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. BEST Inc
Performance |
| Timeline |
| Air Transport Services |
| BEST Inc |
Air Transport and BEST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and BEST
The main advantage of trading using opposite Air Transport and BEST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, BEST 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 BEST will offset losses from the drop in BEST'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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |