Correlation Between Hawaiian Holdings and Azul SA
Can any of the company-specific risk be diversified away by investing in both Hawaiian Holdings and Azul SA 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 Hawaiian Holdings and Azul SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawaiian Holdings and Azul SA, you can compare the effects of market volatilities on Hawaiian Holdings and Azul SA 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 Hawaiian Holdings with a short position of Azul SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Holdings and Azul SA.
Diversification Opportunities for Hawaiian Holdings and Azul SA
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and Azul is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Holdings and Azul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azul SA and Hawaiian Holdings 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 Hawaiian Holdings are associated (or correlated) with Azul SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azul SA has no effect on the direction of Hawaiian Holdings i.e., Hawaiian Holdings and Azul SA go up and down completely randomly.
Pair Corralation between Hawaiian Holdings and Azul SA
Allowing for the 90-day total investment horizon Hawaiian Holdings is expected to generate 2.78 times more return on investment than Azul SA. However, Hawaiian Holdings is 2.78 times more volatile than Azul SA. It trades about 0.08 of its potential returns per unit of risk. Azul SA is currently generating about -0.09 per unit of risk. If you would invest 449.00 in Hawaiian Holdings on August 26, 2024 and sell it today you would earn a total of 1,351 from holding Hawaiian Holdings or generate 300.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.72% |
| Values | Daily Returns |
Hawaiian Holdings vs. Azul SA
Performance |
| Timeline |
| Hawaiian Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Azul SA |
Hawaiian Holdings and Azul SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Holdings and Azul SA
The main advantage of trading using opposite Hawaiian Holdings and Azul SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Holdings position performs unexpectedly, Azul SA 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 Azul SA will offset losses from the drop in Azul SA's long position.| Hawaiian Holdings vs. Southwest Airlines | Hawaiian Holdings vs. JetBlue Airways Corp | Hawaiian Holdings vs. United Airlines Holdings | Hawaiian Holdings vs. Delta Air Lines |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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