Correlation Between International Consolidated and Spirit Airlines
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Spirit Airlines 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 Spirit Airlines 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 Spirit Airlines, you can compare the effects of market volatilities on International Consolidated and Spirit Airlines 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 Spirit Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Spirit Airlines.
Diversification Opportunities for International Consolidated and Spirit Airlines
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Spirit is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Spirit Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Airlines 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 Spirit Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Airlines has no effect on the direction of International Consolidated i.e., International Consolidated and Spirit Airlines go up and down completely randomly.
Pair Corralation between International Consolidated and Spirit Airlines
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 0.49 times more return on investment than Spirit Airlines. However, International Consolidated Airlines is 2.03 times less risky than Spirit Airlines. It trades about 0.05 of its potential returns per unit of risk. Spirit Airlines is currently generating about -0.07 per unit of risk. If you would invest 165.00 in International Consolidated Airlines on August 27, 2024 and sell it today you would earn a total of 120.00 from holding International Consolidated Airlines or generate 72.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
International Consolidated Air vs. Spirit Airlines
Performance |
| Timeline |
| International Consolidated |
| Spirit Airlines |
International Consolidated and Spirit Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Spirit Airlines
The main advantage of trading using opposite International Consolidated and Spirit Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Spirit Airlines 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 Spirit Airlines will offset losses from the drop in Spirit Airlines' long position.| International Consolidated vs. Air China Limited | International Consolidated vs. China Southern Airlines |
| Spirit Airlines vs. American Airlines Group | Spirit Airlines vs. Delta Air Lines | Spirit Airlines vs. Southwest Airlines | Spirit Airlines vs. United Airlines 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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