Correlation Between Azul SA and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Azul SA and International Consolidated 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 Azul SA and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azul SA and International Consolidated Airlines, you can compare the effects of market volatilities on Azul SA and International Consolidated 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 Azul SA with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azul SA and International Consolidated.
Diversification Opportunities for Azul SA and International Consolidated
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Azul and International is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Azul SA 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 Azul SA are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Azul SA i.e., Azul SA and International Consolidated go up and down completely randomly.
Pair Corralation between Azul SA and International Consolidated
Given the investment horizon of 90 days Azul SA is expected to under-perform the International Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Azul SA is 1.82 times less risky than International Consolidated. The stock trades about -0.16 of its potential returns per unit of risk. The International Consolidated Airlines is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 264.00 in International Consolidated Airlines on August 31, 2024 and sell it today you would earn a total of 57.00 from holding International Consolidated Airlines or generate 21.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azul SA vs. International Consolidated Air
Performance |
| Timeline |
| Azul SA |
| International Consolidated |
Azul SA and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azul SA and International Consolidated
The main advantage of trading using opposite Azul SA and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azul SA position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Azul SA vs. JetBlue Airways Corp | Azul SA vs. Allegiant Travel | Azul SA vs. SkyWest | Azul SA vs. Air Transport Services |
| International Consolidated vs. Deutsche Lufthansa AG | International Consolidated vs. Air France KLM | International Consolidated vs. Singapore Airlines | International Consolidated vs. Sun Country Airlines |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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