Correlation Between Air Transport and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both Air Transport and Woolworths Group 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 Woolworths Group 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 Woolworths Group Limited, you can compare the effects of market volatilities on Air Transport and Woolworths Group 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 Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Woolworths Group.
Diversification Opportunities for Air Transport and Woolworths Group
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Woolworths is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group 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 Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of Air Transport i.e., Air Transport and Woolworths Group go up and down completely randomly.
Pair Corralation between Air Transport and Woolworths Group
Assuming the 90 days horizon Air Transport Services is expected to generate 2.59 times more return on investment than Woolworths Group. However, Air Transport is 2.59 times more volatile than Woolworths Group Limited. It trades about 0.22 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.14 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Woolworths Group Limited
Performance |
| Timeline |
| Air Transport Services |
| Woolworths Group |
Air Transport and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Woolworths Group
The main advantage of trading using opposite Air Transport and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, Woolworths Group 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 Woolworths Group will offset losses from the drop in Woolworths Group'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 |
| Woolworths Group vs. Perseus Mining Limited | Woolworths Group vs. SWISS WATER DECAFFCOFFEE | Woolworths Group vs. Check Point Software | Woolworths Group vs. AXWAY SOFTWARE EO |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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