Correlation Between Air New and Ubisoft Entertainment
Can any of the company-specific risk be diversified away by investing in both Air New and Ubisoft Entertainment 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 Ubisoft Entertainment 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 Ubisoft Entertainment SA, you can compare the effects of market volatilities on Air New and Ubisoft Entertainment 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 Ubisoft Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Ubisoft Entertainment.
Diversification Opportunities for Air New and Ubisoft Entertainment
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Ubisoft is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Ubisoft Entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment 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 Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of Air New i.e., Air New and Ubisoft Entertainment go up and down completely randomly.
Pair Corralation between Air New and Ubisoft Entertainment
Assuming the 90 days trading horizon Air New Zealand is expected to generate 0.8 times more return on investment than Ubisoft Entertainment. However, Air New Zealand is 1.25 times less risky than Ubisoft Entertainment. It trades about 0.18 of its potential returns per unit of risk. Ubisoft Entertainment SA is currently generating about -0.14 per unit of risk. If you would invest 29.00 in Air New Zealand on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Air New Zealand or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Ubisoft Entertainment SA
Performance |
| Timeline |
| Air New Zealand |
| Ubisoft Entertainment |
Air New and Ubisoft Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Ubisoft Entertainment
The main advantage of trading using opposite Air New and Ubisoft Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Ubisoft Entertainment 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 Ubisoft Entertainment will offset losses from the drop in Ubisoft Entertainment's long position.| Air New vs. Apple Inc | Air New vs. Apple Inc | Air New vs. Superior Plus Corp | Air New vs. SIVERS SEMICONDUCTORS AB |
| Ubisoft Entertainment vs. Sea Limited | Ubisoft Entertainment vs. Superior Plus Corp | Ubisoft Entertainment vs. NMI Holdings | Ubisoft Entertainment vs. SIVERS SEMICONDUCTORS AB |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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