Correlation Between Teuza A and American Airlines
Can any of the company-specific risk be diversified away by investing in both Teuza A 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 Teuza A and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teuza A Fairchild and American Airlines Group, you can compare the effects of market volatilities on Teuza A 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 Teuza A with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teuza A and American Airlines.
Diversification Opportunities for Teuza A and American Airlines
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Teuza and American is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Teuza A Fairchild and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Teuza A 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 Teuza A Fairchild 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 Teuza A i.e., Teuza A and American Airlines go up and down completely randomly.
Pair Corralation between Teuza A and American Airlines
Assuming the 90 days trading horizon Teuza A Fairchild is expected to under-perform the American Airlines. In addition to that, Teuza A is 1.6 times more volatile than American Airlines Group. It trades about -0.06 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.01 per unit of volatility. If you would invest 1,380 in American Airlines Group on January 19, 2024 and sell it today you would earn a total of 22.00 from holding American Airlines Group or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.5% |
| Values | Daily Returns |
Teuza A Fairchild vs. American Airlines Group
Performance |
| Timeline |
| Teuza A Fairchild |
| American Airlines |
Teuza A and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teuza A and American Airlines
The main advantage of trading using opposite Teuza A and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teuza A 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.| Teuza A vs. Rani Zim Shopping | Teuza A vs. Accel Solutions Group | Teuza A vs. Rapac Communication Infrastructure |
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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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