Correlation Between IMCO Industries and American Airlines
Can any of the company-specific risk be diversified away by investing in both IMCO Industries 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 IMCO Industries and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMCO Industries and American Airlines Group, you can compare the effects of market volatilities on IMCO Industries 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 IMCO Industries with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMCO Industries and American Airlines.
Diversification Opportunities for IMCO Industries and American Airlines
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IMCO and American is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding IMCO Industries and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and IMCO Industries 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 IMCO Industries 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 IMCO Industries i.e., IMCO Industries and American Airlines go up and down completely randomly.
Pair Corralation between IMCO Industries and American Airlines
Assuming the 90 days trading horizon IMCO Industries is expected to generate 1.16 times more return on investment than American Airlines. However, IMCO Industries is 1.16 times more volatile than American Airlines Group. It trades about 0.06 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 160,100 in IMCO Industries on January 24, 2024 and sell it today you would earn a total of 102,500 from holding IMCO Industries or generate 64.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 78.95% |
| Values | Daily Returns |
IMCO Industries vs. American Airlines Group
Performance |
| Timeline |
| IMCO Industries |
| American Airlines |
IMCO Industries and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMCO Industries and American Airlines
The main advantage of trading using opposite IMCO Industries and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMCO Industries 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.| IMCO Industries vs. Al Bad Massuot Yitzhak | IMCO Industries vs. Gan Shmuel | IMCO Industries vs. Analyst IMS Investment |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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