Correlation Between Icelandair Group and Icelandic Salmon
Can any of the company-specific risk be diversified away by investing in both Icelandair Group and Icelandic Salmon 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 Icelandic Salmon 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 Icelandic Salmon AS, you can compare the effects of market volatilities on Icelandair Group and Icelandic Salmon 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 Icelandic Salmon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icelandair Group and Icelandic Salmon.
Diversification Opportunities for Icelandair Group and Icelandic Salmon
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Icelandair and Icelandic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Icelandair Group hf and Icelandic Salmon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icelandic Salmon 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 Icelandic Salmon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icelandic Salmon has no effect on the direction of Icelandair Group i.e., Icelandair Group and Icelandic Salmon go up and down completely randomly.
Pair Corralation between Icelandair Group and Icelandic Salmon
Assuming the 90 days trading horizon Icelandair Group hf is expected to generate 1.9 times more return on investment than Icelandic Salmon. However, Icelandair Group is 1.9 times more volatile than Icelandic Salmon AS. It trades about 0.21 of its potential returns per unit of risk. Icelandic Salmon AS is currently generating about 0.01 per unit of risk. If you would invest 110.00 in Icelandair Group hf on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Icelandair Group hf or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icelandair Group hf vs. Icelandic Salmon AS
Performance |
| Timeline |
| Icelandair Group |
| Icelandic Salmon |
Icelandair Group and Icelandic Salmon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icelandair Group and Icelandic Salmon
The main advantage of trading using opposite Icelandair Group and Icelandic Salmon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icelandair Group position performs unexpectedly, Icelandic Salmon 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 Icelandic Salmon will offset losses from the drop in Icelandic Salmon's long position.| Icelandair Group vs. Arion banki hf | Icelandair Group vs. Kvika banki hf | Icelandair Group vs. Iceland Seafood International | Icelandair Group vs. Alvotech |
| Icelandic Salmon vs. Iceland Seafood International | Icelandic Salmon vs. Arion banki hf | Icelandic Salmon vs. Kvika banki hf | Icelandic Salmon vs. slandsbanki 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 CEOs Directory module to screen CEOs from public companies around the world.
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