Correlation Between LATAM Airlines and Aris Mining
Can any of the company-specific risk be diversified away by investing in both LATAM Airlines and Aris Mining 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 LATAM Airlines and Aris Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LATAM Airlines Group and Aris Mining, you can compare the effects of market volatilities on LATAM Airlines and Aris Mining 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 LATAM Airlines with a short position of Aris Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of LATAM Airlines and Aris Mining.
Diversification Opportunities for LATAM Airlines and Aris Mining
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LATAM and Aris is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding LATAM Airlines Group and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining and LATAM Airlines 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 LATAM Airlines Group are associated (or correlated) with Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of LATAM Airlines i.e., LATAM Airlines and Aris Mining go up and down completely randomly.
Pair Corralation between LATAM Airlines and Aris Mining
Considering the 90-day investment horizon LATAM Airlines Group is expected to generate 0.44 times more return on investment than Aris Mining. However, LATAM Airlines Group is 2.3 times less risky than Aris Mining. It trades about 0.46 of its potential returns per unit of risk. Aris Mining is currently generating about 0.07 per unit of risk. If you would invest 3,343 in LATAM Airlines Group on March 10, 2025 and sell it today you would earn a total of 516.00 from holding LATAM Airlines Group or generate 15.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LATAM Airlines Group vs. Aris Mining
Performance |
| Timeline |
| LATAM Airlines Group |
| Aris Mining |
LATAM Airlines and Aris Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LATAM Airlines and Aris Mining
The main advantage of trading using opposite LATAM Airlines and Aris Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LATAM Airlines position performs unexpectedly, Aris Mining 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 Aris Mining will offset losses from the drop in Aris Mining's long position.| LATAM Airlines vs. Allegion PLC | LATAM Airlines vs. Old Republic International | LATAM Airlines vs. US GoldMining Common | LATAM Airlines vs. Barrick Mining |
| Aris Mining vs. Inflection Point Acquisition | Aris Mining vs. Perseus Mining Limited | Aris Mining vs. Getty Images Holdings | Aris Mining vs. Q2 Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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