Correlation Between American Airlines and Intel
Can any of the company-specific risk be diversified away by investing in both American Airlines and Intel 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 American Airlines and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and Intel, you can compare the effects of market volatilities on American Airlines and Intel 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 American Airlines with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Intel.
Diversification Opportunities for American Airlines and Intel
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Intel is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and American 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 American Airlines Group are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of American Airlines i.e., American Airlines and Intel go up and down completely randomly.
Pair Corralation between American Airlines and Intel
Considering the 90-day investment horizon American Airlines Group is expected to generate 0.98 times more return on investment than Intel. However, American Airlines Group is 1.02 times less risky than Intel. It trades about -0.05 of its potential returns per unit of risk. Intel is currently generating about -0.15 per unit of risk. If you would invest 1,513 in American Airlines Group on January 26, 2024 and sell it today you would lose (121.00) from holding American Airlines Group or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Intel
Performance |
| Timeline |
| American Airlines |
| Intel |
American Airlines and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Intel
The main advantage of trading using opposite American Airlines and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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