Correlation Between Opus One and Air Canada
Can any of the company-specific risk be diversified away by investing in both Opus One 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 Opus One and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opus One Resources and Air Canada, you can compare the effects of market volatilities on Opus One 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 Opus One with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opus One and Air Canada.
Diversification Opportunities for Opus One and Air Canada
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Opus and Air is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Opus One Resources and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Opus One 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 Opus One Resources 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 Opus One i.e., Opus One and Air Canada go up and down completely randomly.
Pair Corralation between Opus One and Air Canada
Assuming the 90 days horizon Opus One Resources is expected to generate 7.95 times more return on investment than Air Canada. However, Opus One is 7.95 times more volatile than Air Canada. It trades about 0.1 of its potential returns per unit of risk. Air Canada is currently generating about 0.09 per unit of risk. If you would invest 2.00 in Opus One Resources on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Opus One Resources or generate 150.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Opus One Resources vs. Air Canada
Performance |
| Timeline |
| Opus One Resources |
| Air Canada |
Opus One and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Opus One and Air Canada
The main advantage of trading using opposite Opus One and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opus One 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.| Opus One vs. Air Canada | Opus One vs. Brookfield Office Properties | Opus One vs. Economic Investment Trust | Opus One vs. Western Investment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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