Correlation Between Collins Foods and Air New
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Air New 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 Collins Foods and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Air New Zealand, you can compare the effects of market volatilities on Collins Foods and Air New 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 Collins Foods with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Air New.
Diversification Opportunities for Collins Foods and Air New
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Collins and Air is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and Collins Foods 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 Collins Foods are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Collins Foods i.e., Collins Foods and Air New go up and down completely randomly.
Pair Corralation between Collins Foods and Air New
Assuming the 90 days trading horizon Collins Foods is expected to generate 1.22 times less return on investment than Air New. But when comparing it to its historical volatility, Collins Foods is 1.16 times less risky than Air New. It trades about 0.06 of its potential returns per unit of risk. Air New Zealand is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Air New Zealand on November 2, 2024 and sell it today you would earn a total of 1.00 from holding Air New Zealand or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Air New Zealand
Performance |
| Timeline |
| Collins Foods |
| Air New Zealand |
Collins Foods and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Air New
The main advantage of trading using opposite Collins Foods and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Air New 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 New will offset losses from the drop in Air New's long position.| Collins Foods vs. Oceania Healthcare | Collins Foods vs. Epsilon Healthcare | Collins Foods vs. Bailador Technology Invest | Collins Foods vs. Regal Funds Management |
| Air New vs. My Foodie Box | Air New vs. Retail Food Group | Air New vs. Metro Mining | Air New vs. Collins Foods |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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