Correlation Between LATAM Airlines and Electrovaya Common
Can any of the company-specific risk be diversified away by investing in both LATAM Airlines and Electrovaya Common 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 Electrovaya Common 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 Electrovaya Common Shares, you can compare the effects of market volatilities on LATAM Airlines and Electrovaya Common 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 Electrovaya Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Electrovaya Common.
Diversification Opportunities for LATAM Airlines and Electrovaya Common
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LATAM and Electrovaya is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares 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 Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of LATAM Airlines i.e., LATAM Airlines and Electrovaya Common go up and down completely randomly.
Pair Corralation between LATAM Airlines and Electrovaya Common
Considering the 90-day investment horizon LATAM Airlines is expected to generate 33.88 times less return on investment than Electrovaya Common. But when comparing it to its historical volatility, LATAM Airlines Group is 2.44 times less risky than Electrovaya Common. It trades about 0.02 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 217.00 in Electrovaya Common Shares on October 23, 2024 and sell it today you would earn a total of 30.00 from holding Electrovaya Common Shares or generate 13.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LATAM Airlines Group vs. Electrovaya Common Shares
Performance |
| Timeline |
| LATAM Airlines Group |
| Electrovaya Common Shares |
LATAM Airlines and Electrovaya Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Electrovaya Common
The main advantage of trading using opposite LATAM Airlines and Electrovaya Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines position performs unexpectedly, Electrovaya Common 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 Electrovaya Common will offset losses from the drop in Electrovaya Common's long position.| LATAM Airlines vs. RBC Bearings Incorporated | LATAM Airlines vs. Goosehead Insurance | LATAM Airlines vs. World Houseware Limited | LATAM Airlines vs. Bowhead Specialty Holdings |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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