Correlation Between Chorus Aviation and Bombardier

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

By analyzing existing cross correlation between Chorus Aviation and Bombardier, you can compare the effects of market volatilities on Chorus Aviation and Bombardier 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 Chorus Aviation with a short position of Bombardier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chorus Aviation and Bombardier.

Diversification Opportunities for Chorus Aviation and Bombardier

-0.23

Correlation Coefficient

Chorus Aviation  Bombardier

Very good diversification

The 3 months correlation between Chorus and Bombardier is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Chorus Aviation and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier and Chorus Aviation 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 Chorus Aviation are associated (or correlated) with Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of Chorus Aviation i.e., Chorus Aviation and Bombardier go up and down completely randomly.

Pair Corralation between Chorus Aviation and Bombardier

Assuming the 90 days trading horizon Chorus Aviation is expected to under-perform the Bombardier. But the stock apears to be less risky and, when comparing its historical volatility, Chorus Aviation is 2.0 times less risky than Bombardier. The stock trades about -0.35 of its potential returns per unit of risk. The Bombardier is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  10,641  in Bombardier on September 24, 2024 and sell it today you would lose (1,024) from holding Bombardier or give up 9.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Chorus Aviation  vs.  Bombardier

Chorus Aviation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chorus Aviation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Chorus Aviation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bombardier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bombardier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bombardier is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Chorus Aviation and Bombardier

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

The idea behind Chorus Aviation and Bombardier 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.