Correlation Between Icelandair Group and Festi Hf
Can any of the company-specific risk be diversified away by investing in both Icelandair Group and Festi Hf 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 Icelandair Group and Festi Hf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icelandair Group hf and Festi hf, you can compare the effects of market volatilities on Icelandair Group and Festi Hf 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 Icelandair Group with a short position of Festi Hf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icelandair Group and Festi Hf.
Diversification Opportunities for Icelandair Group and Festi Hf
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icelandair and Festi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Icelandair Group hf and Festi hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Festi hf and Icelandair Group 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 Icelandair Group hf are associated (or correlated) with Festi Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Festi hf has no effect on the direction of Icelandair Group i.e., Icelandair Group and Festi Hf go up and down completely randomly.
Pair Corralation between Icelandair Group and Festi Hf
Assuming the 90 days trading horizon Icelandair Group hf is expected to under-perform the Festi Hf. In addition to that, Icelandair Group is 1.85 times more volatile than Festi hf. It trades about -0.04 of its total potential returns per unit of risk. Festi hf is currently generating about 0.11 per unit of volatility. If you would invest 17,600 in Festi hf on August 29, 2024 and sell it today you would earn a total of 10,200 from holding Festi hf or generate 57.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icelandair Group hf vs. Festi hf
Performance |
| Timeline |
| Icelandair Group |
| Festi hf |
Icelandair Group and Festi Hf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icelandair Group and Festi Hf
The main advantage of trading using opposite Icelandair Group and Festi Hf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icelandair Group position performs unexpectedly, Festi Hf 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 Festi Hf will offset losses from the drop in Festi Hf's long position.| Icelandair Group vs. Iceland Seafood International | Icelandair Group vs. Alvotech | Icelandair Group vs. Kvika banki hf | Icelandair Group vs. Arion banki hf |
| Festi Hf vs. Icelandair Group hf | Festi Hf vs. slandsbanki hf | Festi Hf vs. Iceland Seafood International | Festi Hf vs. Alvotech |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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