Correlation Between Lindblad Expeditions and Air Transport

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

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

Diversification Opportunities for Lindblad Expeditions and Air Transport

-0.27

Correlation Coefficient

Lindblad Expeditions  Air Transport

Very good diversification

The 3 months correlation between Lindblad and Air is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings 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 Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Lindblad Expeditions i.e., Lindblad Expeditions and Air Transport go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and Air Transport

Given the investment horizon of 90 days Lindblad Expeditions Holdings is expected to under-perform the Air Transport. In addition to that, Lindblad Expeditions is 24.75 times more volatile than Air Transport Services. It trades about -0.09 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.29 per unit of volatility. If you would invest  2,187  in Air Transport Services on December 20, 2024 and sell it today you would earn a total of  48.00  from holding Air Transport Services or generate 2.19% return on investment over 90 days.

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

Lindblad Expeditions Holdings  vs.  Air Transport Services

Lindblad Expeditions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lindblad Expeditions Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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.

Air Transport Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lindblad Expeditions and Air Transport

The main advantage of trading using opposite Lindblad Expeditions and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.