Correlation Between Air Transport and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Air Transport and Whirlpool 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 Whirlpool 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 Whirlpool, you can compare the effects of market volatilities on Air Transport and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Whirlpool.
Diversification Opportunities for Air Transport and Whirlpool
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Whirlpool is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Air Transport i.e., Air Transport and Whirlpool go up and down completely randomly.
Pair Corralation between Air Transport and Whirlpool
Assuming the 90 days horizon Air Transport Services is expected to generate 0.11 times more return on investment than Whirlpool. However, Air Transport Services is 9.32 times less risky than Whirlpool. It trades about 0.1 of its potential returns per unit of risk. Whirlpool is currently generating about -0.03 per unit of risk. If you would invest 2,100 in Air Transport Services on November 2, 2024 and sell it today you would earn a total of 20.00 from holding Air Transport Services or generate 0.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Air Transport Services vs. Whirlpool
Performance |
Timeline |
Air Transport Services |
Whirlpool |
Air Transport and Whirlpool Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air Transport and Whirlpool
The main advantage of trading using opposite Air Transport and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.Air Transport vs. Airports of Thailand | Air Transport vs. Airports of Thailand | Air Transport vs. Aena SME SA | Air Transport vs. AENA SME UNSPADR110 |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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