Correlation Between WiseTech Global and Air New
Can any of the company-specific risk be diversified away by investing in both WiseTech Global 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 WiseTech Global and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseTech Global Limited and Air New Zealand, you can compare the effects of market volatilities on WiseTech Global 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 WiseTech Global with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Air New.
Diversification Opportunities for WiseTech Global and Air New
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between WiseTech and Air is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global 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 WiseTech Global 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 WiseTech Global 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 WiseTech Global i.e., WiseTech Global and Air New go up and down completely randomly.
Pair Corralation between WiseTech Global and Air New
Assuming the 90 days trading horizon WiseTech Global Limited is expected to under-perform the Air New. In addition to that, WiseTech Global is 1.15 times more volatile than Air New Zealand. It trades about -0.08 of its total potential returns per unit of risk. Air New Zealand is currently generating about 0.17 per unit of volatility. If you would invest 51.00 in Air New Zealand on October 30, 2024 and sell it today you would earn a total of 5.00 from holding Air New Zealand or generate 9.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseTech Global Limited vs. Air New Zealand
Performance |
| Timeline |
| WiseTech Global |
| Air New Zealand |
WiseTech Global and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseTech Global and Air New
The main advantage of trading using opposite WiseTech Global and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global 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.| WiseTech Global vs. Aneka Tambang Tbk | WiseTech Global vs. Woolworths | WiseTech Global vs. Commonwealth Bank | WiseTech Global vs. BHP Group Limited |
| Air New vs. Farm Pride Foods | Air New vs. Treasury Wine Estates | Air New vs. Autosports Group | Air New vs. Nine Entertainment Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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