Correlation Between Hawaiian Holdings and American Airlines
Can any of the company-specific risk be diversified away by investing in both Hawaiian 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 Hawaiian 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 Hawaiian Holdings and American Airlines Group, you can compare the effects of market volatilities on Hawaiian 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 Hawaiian Holdings with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Holdings and American Airlines.
Diversification Opportunities for Hawaiian Holdings and American Airlines
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hawaiian and American is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Holdings and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Hawaiian 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 Hawaiian Holdings 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 Hawaiian Holdings i.e., Hawaiian Holdings and American Airlines go up and down completely randomly.
Pair Corralation between Hawaiian Holdings and American Airlines
Allowing for the 90-day total investment horizon Hawaiian Holdings is expected to generate 3.33 times more return on investment than American Airlines. However, Hawaiian Holdings is 3.33 times more volatile than American Airlines Group. It trades about 0.02 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.0 per unit of risk. If you would invest 1,942 in Hawaiian Holdings on December 19, 2023 and sell it today you would lose (579.50) from holding Hawaiian Holdings or give up 29.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hawaiian Holdings vs. American Airlines Group
Performance |
Timeline |
Hawaiian Holdings |
American Airlines |
Hawaiian Holdings and American Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hawaiian Holdings and American Airlines
The main advantage of trading using opposite Hawaiian Holdings and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian 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.Hawaiian Holdings vs. Daseke Inc | Hawaiian Holdings vs. Canadian National Railway | Hawaiian Holdings vs. Werner Enterprises | Hawaiian Holdings vs. Canadian Pacific Railway |
American Airlines vs. Daseke Inc | American Airlines vs. Canadian National Railway | American Airlines vs. Werner Enterprises | American Airlines vs. Canadian Pacific Railway |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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