Correlation Between Volato and Corporacion America

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

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

Diversification Opportunities for Volato and Corporacion America

-0.72

Correlation Coefficient

Volato  Corporacion America

Pay attention - limited upside

The 3 months correlation between Volato and Corporacion is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Volato Group and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America and Volato 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 Volato Group are associated (or correlated) with Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of Volato i.e., Volato and Corporacion America go up and down completely randomly.

Pair Corralation between Volato and Corporacion America

Given the investment horizon of 90 days Volato Group is expected to generate 8.9 times more return on investment than Corporacion America. However, Volato is 8.9 times more volatile than Corporacion America Airports. It trades about 0.04 of its potential returns per unit of risk. Corporacion America Airports is currently generating about 0.18 per unit of risk. If you would invest  41.00  in Volato Group on August 31, 2024 and sell it today you would lose (14.00) from holding Volato Group or give up 34.15% of portfolio value over 90 days.

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

Volato Group  vs.  Corporacion America Airports

Volato Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Volato Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Volato reported solid returns over the last few months and may actually be approaching a breakup point.

Corporacion America

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacion America reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volato and Corporacion America

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

The idea behind Volato Group and Corporacion America Airports 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.