Correlation Between Icelandair Group and Sn Hf

Can any of the company-specific risk be diversified away by investing in both Icelandair Group and Sn Hf 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 Sn Hf 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 Sn hf, you can compare the effects of market volatilities on Icelandair Group and Sn Hf 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 Sn Hf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icelandair Group and Sn Hf.

Diversification Opportunities for Icelandair Group and Sn Hf

0.26

Correlation Coefficient

Icelandair Group  Sn Hf

Modest diversification

The 3 months correlation between Icelandair and SYN is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Icelandair Group hf and Sn hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sn 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 Sn Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sn hf has no effect on the direction of Icelandair Group i.e., Icelandair Group and Sn Hf go up and down completely randomly.

Pair Corralation between Icelandair Group and Sn Hf

Assuming the 90 days trading horizon Icelandair Group hf is expected to under-perform the Sn Hf. But the stock apears to be less risky and, when comparing its historical volatility, Icelandair Group hf is 1.78 times less risky than Sn Hf. The stock trades about -0.19 of its potential returns per unit of risk. The Sn hf is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,220  in Sn hf on December 30, 2024 and sell it today you would lose (160.00) from holding Sn hf or give up 4.97% of portfolio value over 90 days.

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

Icelandair Group hf  vs.  Sn 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 inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sn hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sn hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sn Hf is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Icelandair Group and Sn Hf

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

The idea behind Icelandair Group hf and Sn 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.