Correlation Between Air New and ANA Holdings
Can any of the company-specific risk be diversified away by investing in both Air New and ANA Holdings 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 Air New and ANA Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and ANA Holdings ADR, you can compare the effects of market volatilities on Air New and ANA Holdings 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 Air New with a short position of ANA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and ANA Holdings.
Diversification Opportunities for Air New and ANA Holdings
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and ANA is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and ANA Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANA Holdings ADR and Air New 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 Air New Zealand are associated (or correlated) with ANA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANA Holdings ADR has no effect on the direction of Air New i.e., Air New and ANA Holdings go up and down completely randomly.
Pair Corralation between Air New and ANA Holdings
Assuming the 90 days horizon Air New Zealand is expected to generate 0.98 times more return on investment than ANA Holdings. However, Air New Zealand is 1.02 times less risky than ANA Holdings. It trades about 0.01 of its potential returns per unit of risk. ANA Holdings ADR is currently generating about -0.03 per unit of risk. If you would invest 165.00 in Air New Zealand on September 3, 2024 and sell it today you would lose (1.00) from holding Air New Zealand or give up 0.61% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Air New Zealand vs. ANA Holdings ADR
Performance |
Timeline |
Air New Zealand |
ANA Holdings ADR |
Air New and ANA Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air New and ANA Holdings
The main advantage of trading using opposite Air New and ANA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, ANA Holdings 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 ANA Holdings will offset losses from the drop in ANA Holdings' long position.Air New vs. AirAsia Group Berhad | Air New vs. ANA Holdings ADR | Air New vs. Cebu Air | Air New vs. Air France KLM SA |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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