Correlation Between Qantas Airways and Air France
Can any of the company-specific risk be diversified away by investing in both Qantas Airways 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 Qantas Airways and Air France into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qantas Airways Limited and Air France KLM SA, you can compare the effects of market volatilities on Qantas Airways 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 Qantas Airways with a short position of Air France. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qantas Airways and Air France.
Diversification Opportunities for Qantas Airways and Air France
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Qantas and Air is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways Limited and Air France KLM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM and Qantas Airways 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 Qantas Airways Limited 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 Qantas Airways i.e., Qantas Airways and Air France go up and down completely randomly.
Pair Corralation between Qantas Airways and Air France
Assuming the 90 days horizon Qantas Airways Limited is expected to generate 0.77 times more return on investment than Air France. However, Qantas Airways Limited is 1.3 times less risky than Air France. It trades about 0.21 of its potential returns per unit of risk. Air France KLM SA is currently generating about -0.01 per unit of risk. If you would invest 419.00 in Qantas Airways Limited on August 29, 2024 and sell it today you would earn a total of 121.00 from holding Qantas Airways Limited or generate 28.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qantas Airways Limited vs. Air France KLM SA
Performance |
| Timeline |
| Qantas Airways |
| Air France KLM |
Qantas Airways and Air France Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qantas Airways and Air France
The main advantage of trading using opposite Qantas Airways and Air France positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qantas Airways 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.| Qantas Airways vs. Finnair Oyj | Qantas Airways vs. easyJet plc | Qantas Airways vs. Norse Atlantic ASA | Qantas Airways vs. Air New Zealand |
| Air France vs. Finnair Oyj | Air France vs. easyJet plc | Air France vs. Norse Atlantic ASA | Air France vs. Air China Limited |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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