Correlation Between AirIQ and Imaflex
Can any of the company-specific risk be diversified away by investing in both AirIQ and Imaflex 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 AirIQ and Imaflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AirIQ Inc and Imaflex, you can compare the effects of market volatilities on AirIQ and Imaflex 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 AirIQ with a short position of Imaflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of AirIQ and Imaflex.
Diversification Opportunities for AirIQ and Imaflex
Good diversification
The 3 months correlation between AirIQ and Imaflex is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AirIQ Inc and Imaflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imaflex and AirIQ 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 AirIQ Inc are associated (or correlated) with Imaflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imaflex has no effect on the direction of AirIQ i.e., AirIQ and Imaflex go up and down completely randomly.
Pair Corralation between AirIQ and Imaflex
Given the investment horizon of 90 days AirIQ Inc is expected to generate 2.05 times more return on investment than Imaflex. However, AirIQ is 2.05 times more volatile than Imaflex. It trades about 0.03 of its potential returns per unit of risk. Imaflex is currently generating about -0.01 per unit of risk. If you would invest 44.00 in AirIQ Inc on August 26, 2024 and sell it today you would earn a total of 1.00 from holding AirIQ Inc or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AirIQ Inc vs. Imaflex
Performance |
| Timeline |
| AirIQ Inc |
| Imaflex |
AirIQ and Imaflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AirIQ and Imaflex
The main advantage of trading using opposite AirIQ and Imaflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AirIQ position performs unexpectedly, Imaflex 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 Imaflex will offset losses from the drop in Imaflex's long position.The idea behind AirIQ Inc and Imaflex pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Imaflex vs. Stella Jones | Imaflex vs. Gildan Activewear | Imaflex vs. Toromont Industries | Imaflex vs. Waste Connections |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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