Correlation Between Air Transport and CROWN

Can any of the company-specific risk be diversified away by investing in both Air Transport and CROWN 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 CROWN 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 CROWN CASTLE INTERNATIONAL, you can compare the effects of market volatilities on Air Transport and CROWN 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 CROWN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and CROWN.

Diversification Opportunities for Air Transport and CROWN

-0.2

Correlation Coefficient

Air Transport  CROWN

Good diversification

The 3 months correlation between Air and CROWN is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and CROWN CASTLE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTERNA 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTERNA has no effect on the direction of Air Transport i.e., Air Transport and CROWN go up and down completely randomly.

Pair Corralation between Air Transport and CROWN

Given the investment horizon of 90 days Air Transport Services is expected to generate 3.53 times more return on investment than CROWN. However, Air Transport is 3.53 times more volatile than CROWN CASTLE INTERNATIONAL. It trades about 0.16 of its potential returns per unit of risk. CROWN CASTLE INTERNATIONAL is currently generating about -0.13 per unit of risk. If you would invest  1,619  in Air Transport Services on October 22, 2024 and sell it today you would earn a total of  592.00  from holding Air Transport Services or generate 36.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Air Transport Services  vs.  CROWN CASTLE INTERNATIONAL

Air Transport Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CROWN CASTLE INTERNATIONAL investors.

Pair Trading with Air Transport and CROWN

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

The idea behind Air Transport Services and CROWN CASTLE INTERNATIONAL 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.