Correlation Between International Consolidated and Air France
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and Air France into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Air France KLM, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Air France.
Diversification Opportunities for International Consolidated and Air France
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between International and Air is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Air France KLM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM and International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Air France go up and down completely randomly.
Pair Corralation between International Consolidated and Air France
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 0.69 times more return on investment than Air France. However, International Consolidated Airlines is 1.45 times less risky than Air France. It trades about 0.14 of its potential returns per unit of risk. Air France KLM is currently generating about -0.08 per unit of risk. If you would invest 384.00 in International Consolidated Airlines on August 25, 2024 and sell it today you would earn a total of 233.00 from holding International Consolidated Airlines or generate 60.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Air France KLM
Performance |
| Timeline |
| International Consolidated |
| Air France KLM |
International Consolidated and Air France Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Air France
The main advantage of trading using opposite International Consolidated and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Air France KLM SA | International Consolidated vs. Air France KLM | International Consolidated vs. Finnair Oyj | International Consolidated vs. AirAsia Group Berhad |
| Air France vs. International Consolidated Airlines | Air France vs. Air France KLM SA | Air France vs. Finnair Oyj | Air France vs. AirAsia Group Berhad |
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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