Correlation Between Air Transport and 126408HH9

Can any of the company-specific risk be diversified away by investing in both Air Transport and 126408HH9 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 Air Transport and 126408HH9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Transport Services and CSX P 325, you can compare the effects of market volatilities on Air Transport and 126408HH9 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 Air Transport with a short position of 126408HH9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and 126408HH9.

Diversification Opportunities for Air Transport and 126408HH9

0.47

Correlation Coefficient

Air Transport  126408HH9

Very weak diversification

The 3 months correlation between Air and 126408HH9 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and CSX P 325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX P 325 and Air Transport 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 Air Transport Services are associated (or correlated) with 126408HH9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX P 325 has no effect on the direction of Air Transport i.e., Air Transport and 126408HH9 go up and down completely randomly.

Pair Corralation between Air Transport and 126408HH9

Given the investment horizon of 90 days Air Transport Services is expected to generate 1.33 times more return on investment than 126408HH9. However, Air Transport is 1.33 times more volatile than CSX P 325. It trades about 0.09 of its potential returns per unit of risk. CSX P 325 is currently generating about 0.11 per unit of risk. If you would invest  2,195  in Air Transport Services on November 23, 2024 and sell it today you would earn a total of  35.00  from holding Air Transport Services or generate 1.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Air Transport Services  vs.  CSX P 325

Air Transport Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CSX P 325

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSX P 325 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 126408HH9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Air Transport and 126408HH9

The main advantage of trading using opposite Air Transport and 126408HH9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, 126408HH9 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 126408HH9 will offset losses from the drop in 126408HH9's long position.

The idea behind Air Transport Services and CSX P 325 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.