Correlation Between Qantas Airways and Air New
Can any of the company-specific risk be diversified away by investing in both Qantas Airways and Air New 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 New 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 New Zealand, you can compare the effects of market volatilities on Qantas Airways and Air New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qantas Airways and Air New.
Diversification Opportunities for Qantas Airways and Air New
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Qantas and Air is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways Limited and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Qantas Airways i.e., Qantas Airways and Air New go up and down completely randomly.
Pair Corralation between Qantas Airways and Air New
Assuming the 90 days horizon Qantas Airways Limited is expected to generate 0.31 times more return on investment than Air New. However, Qantas Airways Limited is 3.26 times less risky than Air New. It trades about 0.16 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.04 per unit of risk. If you would invest 501.00 in Qantas Airways Limited on August 25, 2024 and sell it today you would earn a total of 39.00 from holding Qantas Airways Limited or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qantas Airways Limited vs. Air New Zealand
Performance |
| Timeline |
| Qantas Airways |
| Air New Zealand |
Qantas Airways and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qantas Airways and Air New
The main advantage of trading using opposite Qantas Airways and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qantas Airways position performs unexpectedly, Air New 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 New will offset losses from the drop in Air New'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 New vs. Air China Limited | Air New vs. Air France KLM SA | Air New vs. AirAsia Group Berhad | Air New vs. China Southern Airlines |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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