Correlation Between Covivio Hotels and Air France
Can any of the company-specific risk be diversified away by investing in both Covivio Hotels and Air France 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 Covivio Hotels and Air France into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Covivio Hotels and Air France KLM SA, you can compare the effects of market volatilities on Covivio Hotels and Air France 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 Covivio Hotels with a short position of Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covivio Hotels and Air France.
Diversification Opportunities for Covivio Hotels and Air France
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Covivio and Air is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Covivio Hotels and Air France KLM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM and Covivio Hotels 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 Covivio Hotels are associated (or correlated) with Air France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air France KLM has no effect on the direction of Covivio Hotels i.e., Covivio Hotels and Air France go up and down completely randomly.
Pair Corralation between Covivio Hotels and Air France
Assuming the 90 days trading horizon Covivio Hotels is expected to generate 0.49 times more return on investment than Air France. However, Covivio Hotels is 2.02 times less risky than Air France. It trades about 0.07 of its potential returns per unit of risk. Air France KLM SA is currently generating about -0.03 per unit of risk. If you would invest 1,283 in Covivio Hotels on August 30, 2024 and sell it today you would earn a total of 572.00 from holding Covivio Hotels or generate 44.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Covivio Hotels vs. Air France KLM SA
Performance |
| Timeline |
| Covivio Hotels |
| Air France KLM |
Covivio Hotels and Air France Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Covivio Hotels and Air France
The main advantage of trading using opposite Covivio Hotels and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covivio Hotels position performs unexpectedly, Air France 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 France will offset losses from the drop in Air France's long position.| Covivio Hotels vs. Covivio SA | Covivio Hotels vs. Altarea SCA | Covivio Hotels vs. Icade SA | Covivio Hotels vs. Gecina SA |
| Air France vs. Covivio Hotels | Air France vs. Invibes Advertising NV | Air France vs. Broadpeak SA | Air France vs. Union Technologies Informatique |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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