Correlation Between Auckland International and Assa Abloy
Can any of the company-specific risk be diversified away by investing in both Auckland International and Assa Abloy 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 Auckland International and Assa Abloy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auckland International Airport and Assa Abloy AB, you can compare the effects of market volatilities on Auckland International and Assa Abloy 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 Auckland International with a short position of Assa Abloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auckland International and Assa Abloy.
Diversification Opportunities for Auckland International and Assa Abloy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Auckland and Assa is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Auckland International Airport and Assa Abloy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assa Abloy AB and Auckland International 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 Auckland International Airport are associated (or correlated) with Assa Abloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assa Abloy AB has no effect on the direction of Auckland International i.e., Auckland International and Assa Abloy go up and down completely randomly.
Pair Corralation between Auckland International and Assa Abloy
Assuming the 90 days horizon Auckland International Airport is expected to generate 2.81 times more return on investment than Assa Abloy. However, Auckland International is 2.81 times more volatile than Assa Abloy AB. It trades about 0.12 of its potential returns per unit of risk. Assa Abloy AB is currently generating about 0.16 per unit of risk. If you would invest 2,183 in Auckland International Airport on November 2, 2024 and sell it today you would earn a total of 175.00 from holding Auckland International Airport or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auckland International Airport vs. Assa Abloy AB
Performance |
| Timeline |
| Auckland International |
| Assa Abloy AB |
Auckland International and Assa Abloy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auckland International and Assa Abloy
The main advantage of trading using opposite Auckland International and Assa Abloy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auckland International position performs unexpectedly, Assa Abloy 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 Assa Abloy will offset losses from the drop in Assa Abloy's long position.| Auckland International vs. Aeroports de Paris | Auckland International vs. Aena SME SA | Auckland International vs. Aena SME SA | Auckland International vs. Airports of Thailand |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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