Correlation Between Independence Realty and Air Transport
Can any of the company-specific risk be diversified away by investing in both Independence Realty and Air Transport 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 Independence Realty and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Independence Realty Trust and Air Transport Services, you can compare the effects of market volatilities on Independence Realty and Air Transport 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 Independence Realty with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Realty and Air Transport.
Diversification Opportunities for Independence Realty and Air Transport
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Independence and Air is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty Trust and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and Independence Realty 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 Independence Realty Trust are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Independence Realty i.e., Independence Realty and Air Transport go up and down completely randomly.
Pair Corralation between Independence Realty and Air Transport
Considering the 90-day investment horizon Independence Realty is expected to generate 2.55 times less return on investment than Air Transport. But when comparing it to its historical volatility, Independence Realty Trust is 2.89 times less risky than Air Transport. It trades about 0.15 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,277 in Air Transport Services on September 3, 2024 and sell it today you would earn a total of 928.00 from holding Air Transport Services or generate 72.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Independence Realty Trust vs. Air Transport Services
Performance |
| Timeline |
| Independence Realty Trust |
| Air Transport Services |
Independence Realty and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independence Realty and Air Transport
The main advantage of trading using opposite Independence Realty and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Realty position performs unexpectedly, Air Transport 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 Transport will offset losses from the drop in Air Transport's long position.| Independence Realty vs. Clipper Realty | Independence Realty vs. Centerspace | Independence Realty vs. Elme Communities | Independence Realty vs. UDR Inc |
| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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