Correlation Between GMO Internet and Air Canada
Can any of the company-specific risk be diversified away by investing in both GMO Internet and Air Canada 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 GMO Internet and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Air Canada, you can compare the effects of market volatilities on GMO Internet and Air Canada 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 GMO Internet with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Air Canada.
Diversification Opportunities for GMO Internet and Air Canada
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GMO and Air is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and GMO Internet 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 GMO Internet are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of GMO Internet i.e., GMO Internet and Air Canada go up and down completely randomly.
Pair Corralation between GMO Internet and Air Canada
Assuming the 90 days horizon GMO Internet is expected to generate 0.82 times more return on investment than Air Canada. However, GMO Internet is 1.22 times less risky than Air Canada. It trades about 0.15 of its potential returns per unit of risk. Air Canada is currently generating about -0.3 per unit of risk. If you would invest 1,740 in GMO Internet on December 8, 2024 and sell it today you would earn a total of 110.00 from holding GMO Internet or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. Air Canada
Performance |
| Timeline |
| GMO Internet |
| Air Canada |
GMO Internet and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Air Canada
The main advantage of trading using opposite GMO Internet and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet position performs unexpectedly, Air Canada 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 Canada will offset losses from the drop in Air Canada's long position.| GMO Internet vs. Commonwealth Bank of | ||
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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