Correlation Between Air Transport and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Air Transport and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on Air Transport and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Iridium Communications.
Diversification Opportunities for Air Transport and Iridium Communications
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and Iridium is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Air Transport i.e., Air Transport and Iridium Communications go up and down completely randomly.
Pair Corralation between Air Transport and Iridium Communications
Assuming the 90 days horizon Air Transport Services is expected to generate 0.33 times more return on investment than Iridium Communications. However, Air Transport Services is 3.06 times less risky than Iridium Communications. It trades about 0.2 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.08 per unit of risk. If you would invest 2,080 in Air Transport Services on October 14, 2024 and sell it today you would earn a total of 40.00 from holding Air Transport Services or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Iridium Communications
Performance |
| Timeline |
| Air Transport Services |
| Iridium Communications |
Air Transport and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Iridium Communications
The main advantage of trading using opposite Air Transport and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Air Transport vs. UNIDOC HEALTH P | Air Transport vs. EBRO FOODS | Air Transport vs. BG Foods | Air Transport vs. Siemens Healthineers AG |
| Iridium Communications vs. BRAGG GAMING GRP | Iridium Communications vs. GigaMedia | Iridium Communications vs. GAMESTOP | Iridium Communications vs. Boyd Gaming |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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