Correlation Between IPC MEXICO and Air Transport

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

By analyzing existing cross correlation between IPC MEXICO and Air Transport Services, you can compare the effects of market volatilities on IPC MEXICO and Air Transport 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 IPC MEXICO with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and Air Transport.

Diversification Opportunities for IPC MEXICO and Air Transport

0.19

Correlation Coefficient

IPC MEXICO  Air Transport

Average diversification

The 3 months correlation between IPC and Air is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and IPC MEXICO 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 IPC MEXICO are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of IPC MEXICO i.e., IPC MEXICO and Air Transport go up and down completely randomly.

Pair Corralation between IPC MEXICO and Air Transport

If you would invest  22,553  in Air Transport Services on January 19, 2024 and sell it today you would earn a total of  0.00  from holding Air Transport Services or generate 0.0% return on investment over 90 days.

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

IPC MEXICO  vs.  Air Transport Services

Pair Trading with IPC MEXICO and Air Transport

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

The idea behind IPC MEXICO and Air Transport Services 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.