Correlation Between Air Transport and SNDL
Can any of the company-specific risk be diversified away by investing in both Air Transport and SNDL 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 SNDL 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 SNDL Inc, you can compare the effects of market volatilities on Air Transport and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and SNDL.
Diversification Opportunities for Air Transport and SNDL
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and SNDL is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Air Transport i.e., Air Transport and SNDL go up and down completely randomly.
Pair Corralation between Air Transport and SNDL
Given the investment horizon of 90 days Air Transport is expected to generate 3.27 times less return on investment than SNDL. But when comparing it to its historical volatility, Air Transport Services is 1.28 times less risky than SNDL. It trades about 0.0 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 259.00 in SNDL Inc on September 2, 2024 and sell it today you would lose (66.00) from holding SNDL Inc or give up 25.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. SNDL Inc
Performance |
| Timeline |
| Air Transport Services |
| SNDL Inc |
Air Transport and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and SNDL
The main advantage of trading using opposite Air Transport and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL'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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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