Correlation Between Nova Leap and Air Canada
Can any of the company-specific risk be diversified away by investing in both Nova Leap and Air Canada 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 Nova Leap and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Leap Health and Air Canada, you can compare the effects of market volatilities on Nova Leap and Air Canada 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 Nova Leap with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Leap and Air Canada.
Diversification Opportunities for Nova Leap and Air Canada
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nova and Air is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nova Leap Health and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Nova Leap 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 Nova Leap Health are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Nova Leap i.e., Nova Leap and Air Canada go up and down completely randomly.
Pair Corralation between Nova Leap and Air Canada
Assuming the 90 days horizon Nova Leap Health is expected to under-perform the Air Canada. In addition to that, Nova Leap is 2.04 times more volatile than Air Canada. It trades about 0.0 of its total potential returns per unit of risk. Air Canada is currently generating about 0.12 per unit of volatility. If you would invest 1,814 in Air Canada on August 26, 2024 and sell it today you would earn a total of 606.00 from holding Air Canada or generate 33.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Leap Health vs. Air Canada
Performance |
| Timeline |
| Nova Leap Health |
| Air Canada |
Nova Leap and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Leap and Air Canada
The main advantage of trading using opposite Nova Leap and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Leap position performs unexpectedly, Air Canada 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 Canada will offset losses from the drop in Air Canada's long position.| Nova Leap vs. Reliq Health Technologies | Nova Leap vs. NeuPath Health | Nova Leap vs. Bewhere Holdings | Nova Leap vs. AnalytixInsight |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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