Correlation Between NYSE Composite and Air France
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Air France 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 NYSE Composite and Air France into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Air France KLM, you can compare the effects of market volatilities on NYSE Composite and Air France 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 NYSE Composite with a short position of Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Air France.
Diversification Opportunities for NYSE Composite and Air France
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Air is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Air France KLM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM and NYSE Composite 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 NYSE Composite are associated (or correlated) with Air France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air France KLM has no effect on the direction of NYSE Composite i.e., NYSE Composite and Air France go up and down completely randomly.
Pair Corralation between NYSE Composite and Air France
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.28 times more return on investment than Air France. However, NYSE Composite is 3.64 times less risky than Air France. It trades about 0.33 of its potential returns per unit of risk. Air France KLM is currently generating about -0.01 per unit of risk. If you would invest 1,909,542 in NYSE Composite on November 3, 2024 and sell it today you would earn a total of 90,340 from holding NYSE Composite or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Air France KLM
Performance |
| Timeline |
NYSE Composite and Air France Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Air France KLM
Pair trading matchups for Air France
Pair Trading with NYSE Composite and Air France
The main advantage of trading using opposite NYSE Composite and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Air France 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 France will offset losses from the drop in Air France's long position.| NYSE Composite vs. Palomar Holdings | NYSE Composite vs. The Peoples Insurance | NYSE Composite vs. Radian Group | NYSE Composite vs. Nascent Wine |
| Air France vs. International Consolidated Airlines | Air France vs. Air France KLM SA | Air France vs. Finnair Oyj | Air France vs. AirAsia Group Berhad |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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