Correlation Between Anglo American and Air Transport
Can any of the company-specific risk be diversified away by investing in both Anglo American and Air Transport 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 Anglo American and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American plc and Air Transport Services, you can compare the effects of market volatilities on Anglo American and Air Transport 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 Anglo American with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Air Transport.
Diversification Opportunities for Anglo American and Air Transport
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Anglo and Air is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American plc and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and Anglo American 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 Anglo American plc are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Anglo American i.e., Anglo American and Air Transport go up and down completely randomly.
Pair Corralation between Anglo American and Air Transport
Assuming the 90 days trading horizon Anglo American is expected to generate 10.39 times less return on investment than Air Transport. In addition to that, Anglo American is 2.43 times more volatile than Air Transport Services. It trades about 0.0 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.06 per unit of volatility. If you would invest 2,100 in Air Transport Services on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Air Transport Services or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American plc vs. Air Transport Services
Performance |
| Timeline |
| Anglo American plc |
| Air Transport Services |
Anglo American and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Air Transport
The main advantage of trading using opposite Anglo American and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Air Transport 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 Transport will offset losses from the drop in Air Transport's long position.| Anglo American vs. PT Steel Pipe | Anglo American vs. ELL ENVIRONHLDGS HD 0001 | Anglo American vs. ZhongAn Online P | Anglo American vs. Warner Music Group |
| Air Transport vs. BOS BETTER ONLINE | Air Transport vs. Synovus Financial Corp | Air Transport vs. SALESFORCE INC CDR | Air Transport vs. GungHo Online Entertainment |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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