Correlation Between FORWARD AIR and Enter Air
Can any of the company-specific risk be diversified away by investing in both FORWARD AIR and Enter Air 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 FORWARD AIR and Enter Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORWARD AIR P and Enter Air SA, you can compare the effects of market volatilities on FORWARD AIR and Enter Air 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 FORWARD AIR with a short position of Enter Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and Enter Air.
Diversification Opportunities for FORWARD AIR and Enter Air
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FORWARD and Enter is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Enter Air SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enter Air SA and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with Enter Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enter Air SA has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and Enter Air go up and down completely randomly.
Pair Corralation between FORWARD AIR and Enter Air
Assuming the 90 days horizon FORWARD AIR P is expected to generate 0.78 times more return on investment than Enter Air. However, FORWARD AIR P is 1.29 times less risky than Enter Air. It trades about 0.06 of its potential returns per unit of risk. Enter Air SA is currently generating about 0.02 per unit of risk. If you would invest 3,220 in FORWARD AIR P on September 2, 2024 and sell it today you would earn a total of 140.00 from holding FORWARD AIR P or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FORWARD AIR P vs. Enter Air SA
Performance |
| Timeline |
| FORWARD AIR P |
| Enter Air SA |
FORWARD AIR and Enter Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FORWARD AIR and Enter Air
The main advantage of trading using opposite FORWARD AIR and Enter Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR position performs unexpectedly, Enter Air 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 Enter Air will offset losses from the drop in Enter Air's long position.| FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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