Correlation Between Seven West and Air New
Can any of the company-specific risk be diversified away by investing in both Seven West and Air New 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 Seven West and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and Air New Zealand, you can compare the effects of market volatilities on Seven West and Air New 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 Seven West with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Air New.
Diversification Opportunities for Seven West and Air New
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seven and Air is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and Seven West 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 Seven West Media are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Seven West i.e., Seven West and Air New go up and down completely randomly.
Pair Corralation between Seven West and Air New
Assuming the 90 days trading horizon Seven West Media is expected to under-perform the Air New. In addition to that, Seven West is 3.26 times more volatile than Air New Zealand. It trades about -0.07 of its total potential returns per unit of risk. Air New Zealand is currently generating about 0.07 per unit of volatility. If you would invest 49.00 in Air New Zealand on September 15, 2024 and sell it today you would earn a total of 2.00 from holding Air New Zealand or generate 4.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Seven West Media vs. Air New Zealand
Performance |
Timeline |
Seven West Media |
Air New Zealand |
Seven West and Air New Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seven West and Air New
The main advantage of trading using opposite Seven West and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, Air New 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 New will offset losses from the drop in Air New's long position.Seven West vs. Spirit Telecom | Seven West vs. TPG Telecom | Seven West vs. Qbe Insurance Group | Seven West vs. Pioneer Credit |
Air New vs. Dicker Data | Air New vs. Mirrabooka Investments | Air New vs. Australian Strategic Materials | Air New vs. Diversified United 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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