Correlation Between LATAM Airlines and Falabella
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By analyzing existing cross correlation between LATAM Airlines Group and Falabella, you can compare the effects of market volatilities on LATAM Airlines and Falabella 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 LATAM Airlines with a short position of Falabella. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Falabella.
Diversification Opportunities for LATAM Airlines and Falabella
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LATAM and Falabella is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and Falabella in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falabella and LATAM Airlines 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 LATAM Airlines Group are associated (or correlated) with Falabella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falabella has no effect on the direction of LATAM Airlines i.e., LATAM Airlines and Falabella go up and down completely randomly.
Pair Corralation between LATAM Airlines and Falabella
Assuming the 90 days trading horizon LATAM Airlines Group is expected to generate 1.28 times more return on investment than Falabella. However, LATAM Airlines is 1.28 times more volatile than Falabella. It trades about 0.1 of its potential returns per unit of risk. Falabella is currently generating about 0.11 per unit of risk. If you would invest 565.00 in LATAM Airlines Group on August 28, 2024 and sell it today you would earn a total of 750.00 from holding LATAM Airlines Group or generate 132.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LATAM Airlines Group vs. Falabella
Performance |
| Timeline |
| LATAM Airlines Group |
| Falabella |
LATAM Airlines and Falabella Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Falabella
The main advantage of trading using opposite LATAM Airlines and Falabella positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines position performs unexpectedly, Falabella 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 Falabella will offset losses from the drop in Falabella's long position.| LATAM Airlines vs. Falabella | LATAM Airlines vs. Cencosud | LATAM Airlines vs. Enjoy SA | LATAM Airlines vs. Sociedad Qumica y |
| Falabella vs. Empresas Copec SA | Falabella vs. LATAM Airlines Group | Falabella vs. Sociedad Qumica y | Falabella vs. Banco Santander Chile |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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