Correlation Between Air New and HF SINCLAIR
Can any of the company-specific risk be diversified away by investing in both Air New and HF SINCLAIR 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 HF SINCLAIR 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 HF SINCLAIR P, you can compare the effects of market volatilities on Air New and HF SINCLAIR 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 HF SINCLAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and HF SINCLAIR.
Diversification Opportunities for Air New and HF SINCLAIR
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and HL80 is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and HF SINCLAIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF SINCLAIR P 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 HF SINCLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF SINCLAIR P has no effect on the direction of Air New i.e., Air New and HF SINCLAIR go up and down completely randomly.
Pair Corralation between Air New and HF SINCLAIR
Assuming the 90 days trading horizon Air New Zealand is expected to generate 1.3 times more return on investment than HF SINCLAIR. However, Air New is 1.3 times more volatile than HF SINCLAIR P. It trades about 0.1 of its potential returns per unit of risk. HF SINCLAIR P is currently generating about -0.22 per unit of risk. If you would invest 30.00 in Air New Zealand on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Air New Zealand or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. HF SINCLAIR P
Performance |
| Timeline |
| Air New Zealand |
| HF SINCLAIR P |
Air New and HF SINCLAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and HF SINCLAIR
The main advantage of trading using opposite Air New and HF SINCLAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, HF SINCLAIR 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 HF SINCLAIR will offset losses from the drop in HF SINCLAIR's long position.The idea behind Air New Zealand and HF SINCLAIR P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| HF SINCLAIR vs. Superior Plus Corp | HF SINCLAIR vs. SIVERS SEMICONDUCTORS AB | HF SINCLAIR vs. Norsk Hydro ASA | HF SINCLAIR vs. Reliance Steel Aluminum |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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