Correlation Between Matas AS and American Airlines
Can any of the company-specific risk be diversified away by investing in both Matas AS 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 Matas AS and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matas AS and American Airlines Group, you can compare the effects of market volatilities on Matas AS 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 Matas AS with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matas AS and American Airlines.
Diversification Opportunities for Matas AS and American Airlines
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Matas and American is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Matas AS and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Matas AS 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 Matas AS 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 Matas AS i.e., Matas AS and American Airlines go up and down completely randomly.
Pair Corralation between Matas AS and American Airlines
Assuming the 90 days trading horizon Matas AS is expected to under-perform the American Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Matas AS is 2.12 times less risky than American Airlines. The stock trades about -0.23 of its potential returns per unit of risk. The American Airlines Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,457 in American Airlines Group on January 20, 2024 and sell it today you would lose (46.00) from holding American Airlines Group or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Matas AS vs. American Airlines Group
Performance |
| Timeline |
| Matas AS |
| American Airlines |
Matas AS and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matas AS and American Airlines
The main advantage of trading using opposite Matas AS and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matas AS 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.The idea behind Matas AS and American Airlines Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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