Correlation Between Volaris and China Eastern
Can any of the company-specific risk be diversified away by investing in both Volaris and China Eastern 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 Volaris and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volaris and China Eastern Airlines, you can compare the effects of market volatilities on Volaris and China Eastern 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 Volaris with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volaris and China Eastern.
Diversification Opportunities for Volaris and China Eastern
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Volaris and China is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Volaris and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and Volaris 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 Volaris are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Volaris i.e., Volaris and China Eastern go up and down completely randomly.
Pair Corralation between Volaris and China Eastern
If you would invest 713.00 in Volaris on January 20, 2024 and sell it today you would earn a total of 72.00 from holding Volaris or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Volaris vs. China Eastern Airlines
Performance |
| Timeline |
| Volaris |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Volaris and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volaris and China Eastern
The main advantage of trading using opposite Volaris and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volaris position performs unexpectedly, China Eastern 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 China Eastern will offset losses from the drop in China Eastern's long position.| Volaris vs. Allegiant Travel | Volaris vs. Azul SA | Volaris vs. Alaska Air Group | Volaris vs. International Consolidated Airlines |
| China Eastern vs. Western Digital | China Eastern vs. Uber Technologies | China Eastern vs. US GoldMining Common | China Eastern vs. Valneva SE ADR |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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