Correlation Between Air New and TRAINLINE PLC
Can any of the company-specific risk be diversified away by investing in both Air New and TRAINLINE PLC 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 New and TRAINLINE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and TRAINLINE PLC LS, you can compare the effects of market volatilities on Air New and TRAINLINE PLC 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 New with a short position of TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and TRAINLINE PLC.
Diversification Opportunities for Air New and TRAINLINE PLC
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and TRAINLINE is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS and Air New 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 New Zealand are associated (or correlated) with TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of Air New i.e., Air New and TRAINLINE PLC go up and down completely randomly.
Pair Corralation between Air New and TRAINLINE PLC
Assuming the 90 days trading horizon Air New Zealand is expected to under-perform the TRAINLINE PLC. But the stock apears to be less risky and, when comparing its historical volatility, Air New Zealand is 1.53 times less risky than TRAINLINE PLC. The stock trades about -0.01 of its potential returns per unit of risk. The TRAINLINE PLC LS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 369.00 in TRAINLINE PLC LS on September 20, 2024 and sell it today you would earn a total of 146.00 from holding TRAINLINE PLC LS or generate 39.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. TRAINLINE PLC LS
Performance |
| Timeline |
| Air New Zealand |
| TRAINLINE PLC LS |
Air New and TRAINLINE PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and TRAINLINE PLC
The main advantage of trading using opposite Air New and TRAINLINE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, TRAINLINE PLC 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 TRAINLINE PLC will offset losses from the drop in TRAINLINE PLC's long position.| Air New vs. JD SPORTS FASH | Air New vs. DAIRY FARM INTL | Air New vs. Federal Agricultural Mortgage | Air New vs. Hanison Construction Holdings |
| TRAINLINE PLC vs. SOGECLAIR SA INH | TRAINLINE PLC vs. Air New Zealand | TRAINLINE PLC vs. Shenandoah Telecommunications | TRAINLINE PLC vs. Fair Isaac Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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