Correlation Between Qantas Airways and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Qantas Airways and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on Qantas Airways and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qantas Airways and International Consolidated.
Diversification Opportunities for Qantas Airways and International Consolidated
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Qantas and International is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways Limited and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Qantas Airways i.e., Qantas Airways and International Consolidated go up and down completely randomly.
Pair Corralation between Qantas Airways and International Consolidated
Assuming the 90 days horizon Qantas Airways is expected to generate 1.02 times less return on investment than International Consolidated. In addition to that, Qantas Airways is 1.1 times more volatile than International Consolidated Airlines. It trades about 0.1 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.11 per unit of volatility. If you would invest 390.00 in International Consolidated Airlines on August 29, 2024 and sell it today you would earn a total of 246.00 from holding International Consolidated Airlines or generate 63.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qantas Airways Limited vs. International Consolidated Air
Performance |
| Timeline |
| Qantas Airways |
| International Consolidated |
Qantas Airways and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qantas Airways and International Consolidated
The main advantage of trading using opposite Qantas Airways and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qantas Airways position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated'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 |
| International Consolidated vs. Deere Company | International Consolidated vs. Columbus McKinnon | International Consolidated vs. Hyster Yale Materials Handling | International Consolidated vs. Manitowoc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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