Correlation Between One World and Air France
Can any of the company-specific risk be diversified away by investing in both One World 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 One World and Air France into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One World Universe and Air France KLM, you can compare the effects of market volatilities on One World 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 One World with a short position of Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of One World and Air France.
Diversification Opportunities for One World and Air France
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between One and Air is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding One World Universe 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 One World 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 One World Universe 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 One World i.e., One World and Air France go up and down completely randomly.
Pair Corralation between One World and Air France
Given the investment horizon of 90 days One World Universe is expected to generate 3.38 times more return on investment than Air France. However, One World is 3.38 times more volatile than Air France KLM. It trades about 0.12 of its potential returns per unit of risk. Air France KLM is currently generating about 0.18 per unit of risk. If you would invest 0.70 in One World Universe on November 29, 2024 and sell it today you would earn a total of 0.12 from holding One World Universe or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
One World Universe vs. Air France KLM
Performance |
| Timeline |
| One World Universe |
| Air France KLM |
One World and Air France Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with One World and Air France
The main advantage of trading using opposite One World and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One World 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.| One World vs. TonnerOne World Holdings | One World vs. JPX Global | One World vs. All American Pet | One World vs. RCABS Inc |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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