Correlation Between Fundamental Invest and American Airlines
Can any of the company-specific risk be diversified away by investing in both Fundamental Invest 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 Fundamental Invest and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Invest Stock and American Airlines Group, you can compare the effects of market volatilities on Fundamental Invest 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 Fundamental Invest with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Invest and American Airlines.
Diversification Opportunities for Fundamental Invest and American Airlines
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fundamental and American is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Invest Stock and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Fundamental Invest 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 Fundamental Invest Stock 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 Fundamental Invest i.e., Fundamental Invest and American Airlines go up and down completely randomly.
Pair Corralation between Fundamental Invest and American Airlines
Assuming the 90 days trading horizon Fundamental Invest Stock is expected to generate 0.5 times more return on investment than American Airlines. However, Fundamental Invest Stock is 2.02 times less risky than American Airlines. It trades about -0.02 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.01 per unit of risk. If you would invest 23,303 in Fundamental Invest Stock on January 17, 2024 and sell it today you would lose (3,473) from holding Fundamental Invest Stock or give up 14.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fundamental Invest Stock vs. American Airlines Group
Performance |
| Timeline |
| Fundamental Invest Stock |
| American Airlines |
Fundamental Invest and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fundamental Invest and American Airlines
The main advantage of trading using opposite Fundamental Invest and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Invest 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.| Fundamental Invest vs. Novo Nordisk AS | Fundamental Invest vs. Nordea Bank Abp | Fundamental Invest vs. DSV Panalpina AS | Fundamental Invest vs. AP Mller |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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