Correlation Between Avianca Holdings and American Airlines
Can any of the company-specific risk be diversified away by investing in both Avianca Holdings 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 Avianca Holdings and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avianca Holdings SA and American Airlines Group, you can compare the effects of market volatilities on Avianca Holdings 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 Avianca Holdings with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avianca Holdings and American Airlines.
Diversification Opportunities for Avianca Holdings and American Airlines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Avianca and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Avianca Holdings SA and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Avianca Holdings 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 Avianca Holdings SA 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 Avianca Holdings i.e., Avianca Holdings and American Airlines go up and down completely randomly.
Pair Corralation between Avianca Holdings and American Airlines
If you would invest (100.00) in Avianca Holdings SA on January 24, 2024 and sell it today you would earn a total of 100.00 from holding Avianca Holdings SA or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Avianca Holdings SA vs. American Airlines Group
Performance |
| Timeline |
| Avianca Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Airlines |
Avianca Holdings and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avianca Holdings and American Airlines
The main advantage of trading using opposite Avianca Holdings and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avianca Holdings 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.| Avianca Holdings vs. SkyWest | Avianca Holdings vs. Direct Line Insurance | Avianca Holdings vs. Mesa Air Group | Avianca Holdings vs. Global Crossing Airlines |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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