Correlation Between Chorus Aviation and Cargojet
Can any of the company-specific risk be diversified away by investing in both Chorus Aviation and Cargojet 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 Cargojet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chorus Aviation and Cargojet, you can compare the effects of market volatilities on Chorus Aviation and Cargojet 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 Cargojet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chorus Aviation and Cargojet.
Diversification Opportunities for Chorus Aviation and Cargojet
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chorus and Cargojet is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chorus Aviation and Cargojet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargojet 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 Cargojet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargojet has no effect on the direction of Chorus Aviation i.e., Chorus Aviation and Cargojet go up and down completely randomly.
Pair Corralation between Chorus Aviation and Cargojet
Assuming the 90 days trading horizon Chorus Aviation is expected to generate 1.13 times more return on investment than Cargojet. However, Chorus Aviation is 1.13 times more volatile than Cargojet. It trades about 0.14 of its potential returns per unit of risk. Cargojet is currently generating about 0.04 per unit of risk. If you would invest 204.00 in Chorus Aviation on August 29, 2024 and sell it today you would earn a total of 129.00 from holding Chorus Aviation or generate 63.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chorus Aviation vs. Cargojet
Performance |
| Timeline |
| Chorus Aviation |
| Cargojet |
Chorus Aviation and Cargojet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chorus Aviation and Cargojet
The main advantage of trading using opposite Chorus Aviation and Cargojet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chorus Aviation position performs unexpectedly, Cargojet 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 Cargojet will offset losses from the drop in Cargojet'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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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