Correlation Between Azul SA and Gol Linhas
Can any of the company-specific risk be diversified away by investing in both Azul SA and Gol Linhas 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 Gol Linhas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azul SA and Gol Linhas Areas, you can compare the effects of market volatilities on Azul SA and Gol Linhas 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 Gol Linhas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azul SA and Gol Linhas.
Diversification Opportunities for Azul SA and Gol Linhas
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Azul and Gol is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and Gol Linhas Areas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Linhas Areas 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 Gol Linhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Linhas Areas has no effect on the direction of Azul SA i.e., Azul SA and Gol Linhas go up and down completely randomly.
Pair Corralation between Azul SA and Gol Linhas
Assuming the 90 days trading horizon Azul SA is expected to generate 1.07 times more return on investment than Gol Linhas. However, Azul SA is 1.07 times more volatile than Gol Linhas Areas. It trades about -0.01 of its potential returns per unit of risk. Gol Linhas Areas is currently generating about -0.05 per unit of risk. If you would invest 1,156 in Azul SA on August 28, 2024 and sell it today you would lose (616.00) from holding Azul SA or give up 53.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azul SA vs. Gol Linhas Areas
Performance |
| Timeline |
| Azul SA |
| Gol Linhas Areas |
Azul SA and Gol Linhas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azul SA and Gol Linhas
The main advantage of trading using opposite Azul SA and Gol Linhas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azul SA position performs unexpectedly, Gol Linhas 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 Gol Linhas will offset losses from the drop in Gol Linhas' long position.| Azul SA vs. Gol Linhas Areas | Azul SA vs. CVC Brasil Operadora | Azul SA vs. IRB Brasil Resseguros SA | Azul SA vs. Magazine Luiza SA |
| Gol Linhas vs. Fras le SA | Gol Linhas vs. Indstrias Romi SA | Gol Linhas vs. Clave Indices De | Gol Linhas vs. BTG Pactual Logstica |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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