Correlation Between Chorus Aviation and NFI

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

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

Diversification Opportunities for Chorus Aviation and NFI

-0.49

Correlation Coefficient

Chorus Aviation  NFI

Very good diversification

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

Pair Corralation between Chorus Aviation and NFI

Assuming the 90 days trading horizon Chorus Aviation is expected to under-perform the NFI. But the stock apears to be less risky and, when comparing its historical volatility, Chorus Aviation is 1.12 times less risky than NFI. The stock trades about -0.27 of its potential returns per unit of risk. The NFI Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,375  in NFI Group on October 13, 2024 and sell it today you would lose (9.00) from holding NFI Group or give up 0.65% of portfolio value over 90 days.

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

Chorus Aviation  vs.  NFI Group

Chorus Aviation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chorus Aviation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Chorus Aviation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

NFI Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFI Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Chorus Aviation and NFI

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

The idea behind Chorus Aviation and NFI Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.