Correlation Between Chorus Aviation and Air Canada
Can any of the company-specific risk be diversified away by investing in both Chorus Aviation and Air Canada 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 Chorus Aviation and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chorus Aviation and Air Canada, you can compare the effects of market volatilities on Chorus Aviation and Air Canada 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 Chorus Aviation with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chorus Aviation and Air Canada.
Diversification Opportunities for Chorus Aviation and Air Canada
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chorus and Air is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Chorus Aviation and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Chorus Aviation 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 Chorus Aviation are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Chorus Aviation i.e., Chorus Aviation and Air Canada go up and down completely randomly.
Pair Corralation between Chorus Aviation and Air Canada
Assuming the 90 days trading horizon Chorus Aviation is expected to generate 2.2 times less return on investment than Air Canada. In addition to that, Chorus Aviation is 1.14 times more volatile than Air Canada. It trades about 0.01 of its total potential returns per unit of risk. Air Canada is currently generating about 0.03 per unit of volatility. If you would invest 1,927 in Air Canada on August 26, 2024 and sell it today you would earn a total of 493.00 from holding Air Canada or generate 25.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chorus Aviation vs. Air Canada
Performance |
| Timeline |
| Chorus Aviation |
| Air Canada |
Chorus Aviation and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chorus Aviation and Air Canada
The main advantage of trading using opposite Chorus Aviation and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chorus Aviation position performs unexpectedly, Air Canada 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 Canada will offset losses from the drop in Air Canada's long position.| Chorus Aviation vs. Cargojet | Chorus Aviation vs. Exchange Income | Chorus Aviation vs. Cineplex | Chorus Aviation vs. Transat AT |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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