Correlation Between LATAM Airlines and Integral
Can any of the company-specific risk be diversified away by investing in both LATAM Airlines and Integral 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 Integral 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 Integral Ad Science, you can compare the effects of market volatilities on LATAM Airlines and Integral 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 Integral. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Integral.
Diversification Opportunities for LATAM Airlines and Integral
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LATAM and Integral is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and Integral Ad Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integral Ad Science 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 Integral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integral Ad Science has no effect on the direction of LATAM Airlines i.e., LATAM Airlines and Integral go up and down completely randomly.
Pair Corralation between LATAM Airlines and Integral
Considering the 90-day investment horizon LATAM Airlines Group is expected to generate 0.4 times more return on investment than Integral. However, LATAM Airlines Group is 2.49 times less risky than Integral. It trades about 0.11 of its potential returns per unit of risk. Integral Ad Science is currently generating about -0.06 per unit of risk. If you would invest 2,682 in LATAM Airlines Group on September 2, 2024 and sell it today you would earn a total of 91.00 from holding LATAM Airlines Group or generate 3.39% 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. Integral Ad Science
Performance |
| Timeline |
| LATAM Airlines Group |
| Integral Ad Science |
LATAM Airlines and Integral Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Integral
The main advantage of trading using opposite LATAM Airlines and Integral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines position performs unexpectedly, Integral 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 Integral will offset losses from the drop in Integral's long position.| LATAM Airlines vs. Bt Brands | LATAM Airlines vs. ChampionX | LATAM Airlines vs. Primoris Services | LATAM Airlines vs. BJs Restaurants |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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