Correlation Between American Airlines and Citigroup
Can any of the company-specific risk be diversified away by investing in both American Airlines and Citigroup 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 Citigroup 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 Citigroup, you can compare the effects of market volatilities on American Airlines and Citigroup 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 Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Citigroup.
Diversification Opportunities for American Airlines and Citigroup
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Citigroup is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of American Airlines i.e., American Airlines and Citigroup go up and down completely randomly.
Pair Corralation between American Airlines and Citigroup
Considering the 90-day investment horizon American Airlines Group is expected to under-perform the Citigroup. In addition to that, American Airlines is 1.53 times more volatile than Citigroup. It trades about -0.01 of its total potential returns per unit of risk. Citigroup is currently generating about 0.04 per unit of volatility. If you would invest 4,756 in Citigroup on January 25, 2024 and sell it today you would earn a total of 1,492 from holding Citigroup or generate 31.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Citigroup
Performance |
| Timeline |
| American Airlines |
| Citigroup |
American Airlines and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Citigroup
The main advantage of trading using opposite American Airlines and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup'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 |
| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Royal Bank of |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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