Correlation Between Icelandair Group and Fly Play

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

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

Diversification Opportunities for Icelandair Group and Fly Play

0.36

Correlation Coefficient

Icelandair Group  Fly Play

Weak diversification

The 3 months correlation between Icelandair and Fly is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Icelandair Group hf and Fly Play hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly Play hf and Icelandair Group 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 Icelandair Group hf are associated (or correlated) with Fly Play. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly Play hf has no effect on the direction of Icelandair Group i.e., Icelandair Group and Fly Play go up and down completely randomly.

Pair Corralation between Icelandair Group and Fly Play

Assuming the 90 days trading horizon Icelandair Group hf is expected to generate 0.51 times more return on investment than Fly Play. However, Icelandair Group hf is 1.97 times less risky than Fly Play. It trades about -0.01 of its potential returns per unit of risk. Fly Play hf is currently generating about -0.14 per unit of risk. If you would invest  129.00  in Icelandair Group hf on December 3, 2024 and sell it today you would lose (2.00) from holding Icelandair Group hf or give up 1.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Icelandair Group hf  vs.  Fly Play hf

Icelandair Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icelandair Group hf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Icelandair Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Fly Play hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fly Play hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Icelandair Group and Fly Play

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

The idea behind Icelandair Group hf and Fly Play hf 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 Stocks Directory module to find actively traded stocks across global markets.