Correlation Between Air Transport and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both Air Transport and Qantas Airways 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 Qantas Airways 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 Qantas Airways Limited, you can compare the effects of market volatilities on Air Transport and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Qantas Airways.
Diversification Opportunities for Air Transport and Qantas Airways
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Air and Qantas is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Qantas Airways Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Air Transport i.e., Air Transport and Qantas Airways go up and down completely randomly.
Pair Corralation between Air Transport and Qantas Airways
Assuming the 90 days horizon Air Transport is expected to generate 1.11 times less return on investment than Qantas Airways. But when comparing it to its historical volatility, Air Transport Services is 1.45 times less risky than Qantas Airways. It trades about 0.23 of its potential returns per unit of risk. Qantas Airways Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 501.00 in Qantas Airways Limited on September 4, 2024 and sell it today you would earn a total of 32.00 from holding Qantas Airways Limited or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Air Transport Services vs. Qantas Airways Limited
Performance |
| Timeline |
| Air Transport Services |
| Qantas Airways |
Air Transport and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Qantas Airways
The main advantage of trading using opposite Air Transport and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.| Air Transport vs. KINGBOARD CHEMICAL | Air Transport vs. American Eagle Outfitters | Air Transport vs. G III Apparel Group | Air Transport vs. WESTLAKE CHEMICAL |
| Qantas Airways vs. FARO Technologies | Qantas Airways vs. Universal Insurance Holdings | Qantas Airways vs. Japan Post Insurance | Qantas Airways vs. REVO INSURANCE SPA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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