Correlation Between Clarke and Chorus Aviation
Can any of the company-specific risk be diversified away by investing in both Clarke and Chorus Aviation 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 Clarke and Chorus Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clarke Inc and Chorus Aviation, you can compare the effects of market volatilities on Clarke and Chorus Aviation 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 Clarke with a short position of Chorus Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clarke and Chorus Aviation.
Diversification Opportunities for Clarke and Chorus Aviation
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Clarke and Chorus is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Clarke Inc and Chorus Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chorus Aviation and Clarke 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 Clarke Inc are associated (or correlated) with Chorus Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chorus Aviation has no effect on the direction of Clarke i.e., Clarke and Chorus Aviation go up and down completely randomly.
Pair Corralation between Clarke and Chorus Aviation
Assuming the 90 days trading horizon Clarke Inc is expected to generate 0.17 times more return on investment than Chorus Aviation. However, Clarke Inc is 5.85 times less risky than Chorus Aviation. It trades about -0.12 of its potential returns per unit of risk. Chorus Aviation is currently generating about -0.06 per unit of risk. If you would invest 2,380 in Clarke Inc on September 18, 2024 and sell it today you would lose (20.00) from holding Clarke Inc or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clarke Inc vs. Chorus Aviation
Performance |
| Timeline |
| Clarke Inc |
| Chorus Aviation |
Clarke and Chorus Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clarke and Chorus Aviation
The main advantage of trading using opposite Clarke and Chorus Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clarke position performs unexpectedly, Chorus Aviation 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 Chorus Aviation will offset losses from the drop in Chorus Aviation's long position.The idea behind Clarke Inc and Chorus Aviation 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.| Chorus Aviation vs. Cargojet | Chorus Aviation vs. Exchange Income | Chorus Aviation vs. Cineplex | Chorus Aviation vs. NFI Group |
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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