Correlation Between Energy Technologies and Air New
Can any of the company-specific risk be diversified away by investing in both Energy Technologies 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 Energy Technologies and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Technologies Limited and Air New Zealand, you can compare the effects of market volatilities on Energy Technologies 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 Energy Technologies with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Technologies and Air New.
Diversification Opportunities for Energy Technologies and Air New
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Air is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Energy Technologies Limited 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 Energy Technologies 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 Energy Technologies Limited 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 Energy Technologies i.e., Energy Technologies and Air New go up and down completely randomly.
Pair Corralation between Energy Technologies and Air New
Assuming the 90 days trading horizon Energy Technologies Limited is expected to generate 2.03 times more return on investment than Air New. However, Energy Technologies is 2.03 times more volatile than Air New Zealand. It trades about 0.23 of its potential returns per unit of risk. Air New Zealand is currently generating about 0.17 per unit of risk. If you would invest 3.10 in Energy Technologies Limited on October 16, 2024 and sell it today you would earn a total of 0.50 from holding Energy Technologies Limited or generate 16.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Technologies Limited vs. Air New Zealand
Performance |
| Timeline |
| Energy Technologies |
| Air New Zealand |
Energy Technologies and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Technologies and Air New
The main advantage of trading using opposite Energy Technologies and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Technologies 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.| Energy Technologies vs. Platinum Asset Management | Energy Technologies vs. Computershare | Energy Technologies vs. Hutchison Telecommunications | Energy Technologies vs. Pinnacle Investment Management |
| Air New vs. Charter Hall Education | Air New vs. G8 Education | Air New vs. Energy Technologies Limited | Air New vs. WiseTech Global Limited |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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