Correlation Between International Consolidated and Air Transport
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Air Transport 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 International Consolidated and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Air Transport Services, you can compare the effects of market volatilities on International Consolidated and Air Transport 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 International Consolidated with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Air Transport.
Diversification Opportunities for International Consolidated and Air Transport
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Air is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of International Consolidated i.e., International Consolidated and Air Transport go up and down completely randomly.
Pair Corralation between International Consolidated and Air Transport
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 1.4 times more return on investment than Air Transport. However, International Consolidated is 1.4 times more volatile than Air Transport Services. It trades about 0.09 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.12 per unit of risk. If you would invest 205.00 in International Consolidated Airlines on August 24, 2024 and sell it today you would earn a total of 115.00 from holding International Consolidated Airlines or generate 56.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
International Consolidated Air vs. Air Transport Services
Performance |
| Timeline |
| International Consolidated |
| Air Transport Services |
International Consolidated and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Air Transport
The main advantage of trading using opposite International Consolidated and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| International Consolidated vs. Deutsche Lufthansa AG | International Consolidated vs. Air France KLM | International Consolidated vs. Singapore Airlines | International Consolidated vs. Sun Country Airlines |
| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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