Correlation Between Cargojet and Chorus Aviation

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

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

Diversification Opportunities for Cargojet and Chorus Aviation

-0.17

Correlation Coefficient

Cargojet  Chorus Aviation

Good diversification

The 3 months correlation between Cargojet and Chorus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cargojet and Chorus Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chorus Aviation and Cargojet 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 Cargojet are associated (or correlated) with Chorus Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chorus Aviation has no effect on the direction of Cargojet i.e., Cargojet and Chorus Aviation go up and down completely randomly.

Pair Corralation between Cargojet and Chorus Aviation

Assuming the 90 days trading horizon Cargojet is expected to under-perform the Chorus Aviation. But the stock apears to be less risky and, when comparing its historical volatility, Cargojet is 1.15 times less risky than Chorus Aviation. The stock trades about -0.13 of its potential returns per unit of risk. The Chorus Aviation is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  295.00  in Chorus Aviation on October 10, 2024 and sell it today you would earn a total of  5.00  from holding Chorus Aviation or generate 1.69% return on investment over 90 days.

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

Cargojet  vs.  Chorus Aviation

Cargojet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cargojet 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 basic 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.

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.

Pair Trading with Cargojet and Chorus Aviation

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

The idea behind Cargojet and Chorus Aviation 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.