Correlation Between Auckland International and Flughafen Zrich

Can any of the company-specific risk be diversified away by investing in both Auckland International and Flughafen Zrich 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 Auckland International and Flughafen Zrich into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auckland International Airport and Flughafen Zrich AG, you can compare the effects of market volatilities on Auckland International and Flughafen Zrich 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 Auckland International with a short position of Flughafen Zrich. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auckland International and Flughafen Zrich.

Diversification Opportunities for Auckland International and Flughafen Zrich

0.39

Correlation Coefficient

Auckland International  Flughafen Zrich

Weak diversification

The 3 months correlation between Auckland and Flughafen is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Auckland International Airport and Flughafen Zrich AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flughafen Zrich AG and Auckland International 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 Auckland International Airport are associated (or correlated) with Flughafen Zrich. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flughafen Zrich AG has no effect on the direction of Auckland International i.e., Auckland International and Flughafen Zrich go up and down completely randomly.

Pair Corralation between Auckland International and Flughafen Zrich

Assuming the 90 days horizon Auckland International is expected to generate 1.13 times less return on investment than Flughafen Zrich. In addition to that, Auckland International is 1.85 times more volatile than Flughafen Zrich AG. It trades about 0.02 of its total potential returns per unit of risk. Flughafen Zrich AG is currently generating about 0.05 per unit of volatility. If you would invest  940.00  in Flughafen Zrich AG on November 19, 2024 and sell it today you would earn a total of  68.00  from holding Flughafen Zrich AG or generate 7.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Auckland International Airport  vs.  Flughafen Zrich AG

Auckland International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auckland International Airport are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Auckland International showed solid returns over the last few months and may actually be approaching a breakup point.

Flughafen Zrich AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flughafen Zrich AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Flughafen Zrich showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auckland International and Flughafen Zrich

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

The idea behind Auckland International Airport and Flughafen Zrich AG 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.