Correlation Between Atlas Air and ABB

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Can any of the company-specific risk be diversified away by investing in both Atlas Air and ABB 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 Atlas Air and ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Air Worldwide and ABB Ltd ADR, you can compare the effects of market volatilities on Atlas Air and ABB 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 Atlas Air with a short position of ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Air and ABB.

Diversification Opportunities for Atlas Air and ABB

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Atlas and ABB is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Air Worldwide and ABB Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB Ltd ADR and Atlas Air 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 Atlas Air Worldwide are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB Ltd ADR has no effect on the direction of Atlas Air i.e., Atlas Air and ABB go up and down completely randomly.

Pair Corralation between Atlas Air and ABB

If you would invest  3,900  in ABB Ltd ADR on December 29, 2023 and sell it today you would earn a total of  0.00  from holding ABB Ltd ADR or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Atlas Air Worldwide  vs.  ABB Ltd ADR

 Performance 
       Timeline  
Atlas Air Worldwide 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Atlas Air Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Atlas Air is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
ABB Ltd ADR 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days ABB Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, ABB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Atlas Air and ABB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atlas Air and ABB

The main advantage of trading using opposite Atlas Air and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Air position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.
The idea behind Atlas Air Worldwide and ABB Ltd ADR 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.
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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