Correlation Between American Airlines and Target

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both American Airlines and Target 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 Target 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 Target, you can compare the effects of market volatilities on American Airlines and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Target.

Diversification Opportunities for American Airlines and Target

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between American and Target is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of American Airlines i.e., American Airlines and Target go up and down completely randomly.

Pair Corralation between American Airlines and Target

Considering the 90-day investment horizon American Airlines Group is expected to under-perform the Target. But the stock apears to be less risky and, when comparing its historical volatility, American Airlines Group is 1.38 times less risky than Target. The stock trades about -0.02 of its potential returns per unit of risk. The Target is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  15,199  in Target on December 29, 2023 and sell it today you would earn a total of  2,268  from holding Target or generate 14.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

American Airlines Group  vs.  Target

 Performance 
       Timeline  
American Airlines 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in American Airlines Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, American Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.
Target 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Target unveiled solid returns over the last few months and may actually be approaching a breakup point.

American Airlines and Target Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Airlines and Target

The main advantage of trading using opposite American Airlines and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.
The idea behind American Airlines Group and Target 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

Other Complementary Tools

Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios