Correlation Between Ab Global and American Airlines
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and American Airlines Group, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and American Airlines.
Diversification Opportunities for Ab Global and American Airlines
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between GCEAX and American is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global E and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Ab Global 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 Ab Global E 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 Ab Global i.e., Ab Global and American Airlines go up and down completely randomly.
Pair Corralation between Ab Global and American Airlines
Assuming the 90 days horizon Ab Global E is expected to generate 0.25 times more return on investment than American Airlines. However, Ab Global E is 3.98 times less risky than American Airlines. It trades about -0.16 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.1 per unit of risk. If you would invest 1,639 in Ab Global E on January 25, 2024 and sell it today you would lose (37.00) from holding Ab Global E or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ab Global E vs. American Airlines Group
Performance |
| Timeline |
| Ab Global E |
| American Airlines |
Ab Global and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and American Airlines
The main advantage of trading using opposite Ab Global and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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.| Ab Global vs. American Funds Capital | Ab Global vs. American Funds Capital | Ab Global vs. Capital World Growth | Ab Global vs. Capital World Growth |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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