Correlation Between Air Transport and Carsales
Can any of the company-specific risk be diversified away by investing in both Air Transport and Carsales 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 Carsales 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 CarsalesCom, you can compare the effects of market volatilities on Air Transport and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Carsales.
Diversification Opportunities for Air Transport and Carsales
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Carsales is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Air Transport i.e., Air Transport and Carsales go up and down completely randomly.
Pair Corralation between Air Transport and Carsales
Assuming the 90 days horizon Air Transport Services is expected to generate 4.08 times more return on investment than Carsales. However, Air Transport is 4.08 times more volatile than CarsalesCom. It trades about 0.29 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.37 per unit of risk. If you would invest 1,540 in Air Transport Services on August 28, 2024 and sell it today you would earn a total of 540.00 from holding Air Transport Services or generate 35.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. CarsalesCom
Performance |
| Timeline |
| Air Transport Services |
| CarsalesCom |
Air Transport and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Carsales
The main advantage of trading using opposite Air Transport and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Air Transport vs. Airports of Thailand | Air Transport vs. Aena SME SA | Air Transport vs. AerCap Holdings NV | Air Transport vs. Grupo Aeroportuario del |
| Carsales vs. Grupo Carso SAB | Carsales vs. COMMERCIAL VEHICLE | Carsales vs. ITALIAN WINE BRANDS | Carsales vs. BLUESCOPE STEEL |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |