Correlation Between Air Transport and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both Air Transport and JAPAN TOBACCO 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 JAPAN TOBACCO 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 JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Air Transport and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and JAPAN TOBACCO.
Diversification Opportunities for Air Transport and JAPAN TOBACCO
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and JAPAN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of Air Transport i.e., Air Transport and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between Air Transport and JAPAN TOBACCO
Assuming the 90 days horizon Air Transport Services is expected to generate 2.59 times more return on investment than JAPAN TOBACCO. However, Air Transport is 2.59 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.22 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.01 per unit of risk. If you would invest 1,320 in Air Transport Services on September 12, 2024 and sell it today you would earn a total of 760.00 from holding Air Transport Services or generate 57.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| Air Transport Services |
| JAPAN TOBACCO UNSPADR12 |
Air Transport and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and JAPAN TOBACCO
The main advantage of trading using opposite Air Transport and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, JAPAN TOBACCO 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 JAPAN TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| Air Transport vs. Aena SME SA | Air Transport vs. Superior Plus Corp | Air Transport vs. SIVERS SEMICONDUCTORS AB | Air Transport vs. Norsk Hydro ASA |
| JAPAN TOBACCO vs. MCEWEN MINING INC | JAPAN TOBACCO vs. GALENA MINING LTD | JAPAN TOBACCO vs. GRIFFIN MINING LTD | JAPAN TOBACCO vs. Calibre Mining Corp |
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.
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