Correlation Between Evoke Pharma and American Airlines
Can any of the company-specific risk be diversified away by investing in both Evoke Pharma and American Airlines 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 Evoke Pharma and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evoke Pharma and American Airlines Group, you can compare the effects of market volatilities on Evoke Pharma and American Airlines 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 Evoke Pharma with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evoke Pharma and American Airlines.
Diversification Opportunities for Evoke Pharma and American Airlines
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Evoke and American is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Evoke Pharma and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Evoke Pharma 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 Evoke Pharma are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Evoke Pharma i.e., Evoke Pharma and American Airlines go up and down completely randomly.
Pair Corralation between Evoke Pharma and American Airlines
Given the investment horizon of 90 days Evoke Pharma is expected to under-perform the American Airlines. In addition to that, Evoke Pharma is 2.27 times more volatile than American Airlines Group. It trades about -0.2 of its total potential returns per unit of risk. American Airlines Group is currently generating about -0.07 per unit of volatility. If you would invest 1,492 in American Airlines Group on January 25, 2024 and sell it today you would lose (69.00) from holding American Airlines Group or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evoke Pharma vs. American Airlines Group
Performance |
| Timeline |
| Evoke Pharma |
| American Airlines |
Evoke Pharma and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evoke Pharma and American Airlines
The main advantage of trading using opposite Evoke Pharma and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evoke Pharma position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Evoke Pharma vs. Silver Spike Investment | Evoke Pharma vs. Alkermes Plc | Evoke Pharma vs. Eagle Pharmaceuticals | Evoke Pharma vs. Evotec SE ADR |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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