Correlation Between Air Transport and Metso Outotec
Can any of the company-specific risk be diversified away by investing in both Air Transport and Metso Outotec 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 Metso Outotec 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 Metso Outotec Oyj, you can compare the effects of market volatilities on Air Transport and Metso Outotec 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 Metso Outotec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Metso Outotec.
Diversification Opportunities for Air Transport and Metso Outotec
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Metso is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Metso Outotec Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metso Outotec Oyj 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 Metso Outotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metso Outotec Oyj has no effect on the direction of Air Transport i.e., Air Transport and Metso Outotec go up and down completely randomly.
Pair Corralation between Air Transport and Metso Outotec
Assuming the 90 days horizon Air Transport is expected to generate 8.49 times less return on investment than Metso Outotec. But when comparing it to its historical volatility, Air Transport Services is 2.47 times less risky than Metso Outotec. It trades about 0.07 of its potential returns per unit of risk. Metso Outotec Oyj is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 839.00 in Metso Outotec Oyj on September 14, 2024 and sell it today you would earn a total of 76.00 from holding Metso Outotec Oyj or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Air Transport Services vs. Metso Outotec Oyj
Performance |
| Timeline |
| Air Transport Services |
| Metso Outotec Oyj |
Air Transport and Metso Outotec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Metso Outotec
The main advantage of trading using opposite Air Transport and Metso Outotec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Metso Outotec 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 Metso Outotec will offset losses from the drop in Metso Outotec'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 |
| Metso Outotec vs. Gladstone Investment | Metso Outotec vs. MGIC INVESTMENT | Metso Outotec vs. Nippon Steel | Metso Outotec vs. Insteel Industries |
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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