Correlation Between Nine Entertainment and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both Nine Entertainment and Qantas Airways 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 Nine Entertainment and Qantas Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nine Entertainment Co and Qantas Airways, you can compare the effects of market volatilities on Nine Entertainment and Qantas Airways 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 Nine Entertainment with a short position of Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Entertainment and Qantas Airways.
Diversification Opportunities for Nine Entertainment and Qantas Airways
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nine and Qantas is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nine Entertainment Co and Qantas Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways and Nine Entertainment 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 Nine Entertainment Co are associated (or correlated) with Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Nine Entertainment i.e., Nine Entertainment and Qantas Airways go up and down completely randomly.
Pair Corralation between Nine Entertainment and Qantas Airways
Assuming the 90 days trading horizon Nine Entertainment Co is expected to generate 1.11 times more return on investment than Qantas Airways. However, Nine Entertainment is 1.11 times more volatile than Qantas Airways. It trades about 0.22 of its potential returns per unit of risk. Qantas Airways is currently generating about 0.12 per unit of risk. If you would invest 125.00 in Nine Entertainment Co on October 28, 2024 and sell it today you would earn a total of 10.00 from holding Nine Entertainment Co or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Entertainment Co vs. Qantas Airways
Performance |
| Timeline |
| Nine Entertainment |
| Qantas Airways |
Nine Entertainment and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Entertainment and Qantas Airways
The main advantage of trading using opposite Nine Entertainment and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Entertainment position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.| Nine Entertainment vs. Embark Education Group | Nine Entertainment vs. Ora Banda Mining | Nine Entertainment vs. Hutchison Telecommunications | Nine Entertainment vs. Saferoads Holdings |
| Qantas Airways vs. Lendlease Group | Qantas Airways vs. Bank of Queensland | Qantas Airways vs. Wt Financial Group | Qantas Airways vs. Clime Investment Management |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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