Correlation Between Canon Marketing and Air Transport

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

By analyzing existing cross correlation between Canon Marketing Japan and Air Transport Services, you can compare the effects of market volatilities on Canon Marketing and Air Transport 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 Canon Marketing with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon Marketing and Air Transport.

Diversification Opportunities for Canon Marketing and Air Transport

0.64

Correlation Coefficient

Canon Marketing  Air Transport

Poor diversification

The 3 months correlation between Canon and Air is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and Canon Marketing 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 Canon Marketing Japan are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Canon Marketing i.e., Canon Marketing and Air Transport go up and down completely randomly.

Pair Corralation between Canon Marketing and Air Transport

Assuming the 90 days horizon Canon Marketing Japan is expected to generate 1.78 times more return on investment than Air Transport. However, Canon Marketing is 1.78 times more volatile than Air Transport Services. It trades about 0.33 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.08 per unit of risk. If you would invest  2,760  in Canon Marketing Japan on October 7, 2024 and sell it today you would earn a total of  420.00  from holding Canon Marketing Japan or generate 15.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Canon Marketing Japan  vs.  Air Transport Services

Canon Marketing Japan

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Marketing Japan are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Canon Marketing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Air Transport Services

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 18 (%) 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.

Pair Trading with Canon Marketing and Air Transport

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

The idea behind Canon Marketing Japan and Air Transport Services 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.