Correlation Between Air Transport and Insperity

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

Diversification Opportunities for Air Transport and Insperity

-0.49

Correlation Coefficient

Air Transport  Insperity

Very good diversification

The 3 months correlation between Air and Insperity is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Insperity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insperity 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 Insperity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insperity has no effect on the direction of Air Transport i.e., Air Transport and Insperity go up and down completely randomly.

Pair Corralation between Air Transport and Insperity

Assuming the 90 days horizon Air Transport is expected to generate 25.46 times less return on investment than Insperity. But when comparing it to its historical volatility, Air Transport Services is 4.71 times less risky than Insperity. It trades about 0.0 of its potential returns per unit of risk. Insperity is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,295  in Insperity on September 24, 2024 and sell it today you would earn a total of  5.00  from holding Insperity or generate 0.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Air Transport Services  vs.  Insperity

Air Transport Services

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Insperity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insperity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Insperity is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Air Transport and Insperity

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

The idea behind Air Transport Services and Insperity 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.