Correlation Between LATAM Airlines and Air T
Can any of the company-specific risk be diversified away by investing in both LATAM Airlines and Air T 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 LATAM Airlines and Air T into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LATAM Airlines Group and Air T Inc, you can compare the effects of market volatilities on LATAM Airlines and Air T 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 Air T. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Air T.
Diversification Opportunities for LATAM Airlines and Air T
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LATAM and Air is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and Air T Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air T Inc 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 Air T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air T Inc has no effect on the direction of LATAM Airlines i.e., LATAM Airlines and Air T go up and down completely randomly.
Pair Corralation between LATAM Airlines and Air T
Considering the 90-day investment horizon LATAM Airlines Group is expected to generate 0.39 times more return on investment than Air T. However, LATAM Airlines Group is 2.59 times less risky than Air T. It trades about 0.07 of its potential returns per unit of risk. Air T Inc is currently generating about 0.01 per unit of risk. If you would invest 2,470 in LATAM Airlines Group on August 27, 2024 and sell it today you would earn a total of 216.00 from holding LATAM Airlines Group or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 17.54% |
| Values | Daily Returns |
LATAM Airlines Group vs. Air T Inc
Performance |
| Timeline |
| LATAM Airlines Group |
| Air T Inc |
LATAM Airlines and Air T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Air T
The main advantage of trading using opposite LATAM Airlines and Air T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines position performs unexpectedly, Air T 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 T will offset losses from the drop in Air T's long position.| LATAM Airlines vs. Ryanair Holdings PLC | LATAM Airlines vs. Marine Products | LATAM Airlines vs. Gentex | LATAM Airlines vs. PACCAR Inc |
| Air T vs. Addentax Group Corp | Air T vs. Hub Group | Air T vs. Landstar System | Air T vs. JB Hunt Transport |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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