Correlation Between Aker ASA and American Airlines
Can any of the company-specific risk be diversified away by investing in both Aker ASA 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 Aker ASA and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker ASA and American Airlines Group, you can compare the effects of market volatilities on Aker ASA 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 Aker ASA with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker ASA and American Airlines.
Diversification Opportunities for Aker ASA and American Airlines
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aker and American is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aker ASA and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Aker ASA 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 Aker ASA 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 Aker ASA i.e., Aker ASA and American Airlines go up and down completely randomly.
Pair Corralation between Aker ASA and American Airlines
Assuming the 90 days trading horizon Aker ASA is expected to generate 0.43 times more return on investment than American Airlines. However, Aker ASA is 2.33 times less risky than American Airlines. It trades about 0.11 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.04 per unit of risk. If you would invest 60,350 in Aker ASA on January 20, 2024 and sell it today you would earn a total of 1,450 from holding Aker ASA or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Aker ASA vs. American Airlines Group
Performance |
| Timeline |
| Aker ASA |
| American Airlines |
Aker ASA and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker ASA and American Airlines
The main advantage of trading using opposite Aker ASA and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker ASA 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.| Aker ASA vs. Gjensidige Forsikring ASA | Aker ASA vs. Orkla ASA | Aker ASA vs. Telenor ASA | Aker ASA vs. Yara International ASA |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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