Correlation Between Hagar Hf and Icelandair Group
Can any of the company-specific risk be diversified away by investing in both Hagar Hf and Icelandair Group 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 Hagar Hf and Icelandair Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hagar hf and Icelandair Group hf, you can compare the effects of market volatilities on Hagar Hf and Icelandair Group 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 Hagar Hf with a short position of Icelandair Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hagar Hf and Icelandair Group.
Diversification Opportunities for Hagar Hf and Icelandair Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hagar and Icelandair is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hagar hf and Icelandair Group hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icelandair Group and Hagar Hf 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 Hagar hf are associated (or correlated) with Icelandair Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icelandair Group has no effect on the direction of Hagar Hf i.e., Hagar Hf and Icelandair Group go up and down completely randomly.
Pair Corralation between Hagar Hf and Icelandair Group
Assuming the 90 days trading horizon Hagar Hf is expected to generate 7.92 times less return on investment than Icelandair Group. But when comparing it to its historical volatility, Hagar hf is 2.14 times less risky than Icelandair Group. It trades about 0.05 of its potential returns per unit of risk. Icelandair Group hf is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 108.00 in Icelandair Group hf on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Icelandair Group hf or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hagar hf vs. Icelandair Group hf
Performance |
| Timeline |
| Hagar hf |
| Icelandair Group |
Hagar Hf and Icelandair Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hagar Hf and Icelandair Group
The main advantage of trading using opposite Hagar Hf and Icelandair Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hagar Hf position performs unexpectedly, Icelandair Group 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 Icelandair Group will offset losses from the drop in Icelandair Group's long position.| Hagar Hf vs. Icelandair Group hf | Hagar Hf vs. Arion banki hf | Hagar Hf vs. Festi hf | Hagar Hf vs. Marel hf |
| Icelandair Group vs. Iceland Seafood International | Icelandair Group vs. Alvotech | Icelandair Group vs. Kvika banki hf | Icelandair Group vs. Arion banki hf |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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