Correlation Between Monitronics International and American Airlines
Can any of the company-specific risk be diversified away by investing in both Monitronics International 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 Monitronics International and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monitronics International and American Airlines Group, you can compare the effects of market volatilities on Monitronics International 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 Monitronics International with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monitronics International and American Airlines.
Diversification Opportunities for Monitronics International and American Airlines
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monitronics and American is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Monitronics International and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Monitronics International 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 Monitronics International 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 Monitronics International i.e., Monitronics International and American Airlines go up and down completely randomly.
Pair Corralation between Monitronics International and American Airlines
If you would invest 0.01 in Monitronics International on January 25, 2024 and sell it today you would earn a total of 0.00 from holding Monitronics International or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 2.38% |
| Values | Daily Returns |
Monitronics International vs. American Airlines Group
Performance |
| Timeline |
| Monitronics International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Airlines |
Monitronics International and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monitronics International and American Airlines
The main advantage of trading using opposite Monitronics International and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monitronics International 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.| Monitronics International vs. Black Hills | Monitronics International vs. NorthWestern | Monitronics International vs. Paysafe | Monitronics International vs. Analog Devices |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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