Correlation Between Victory Supermarket and American Airlines
Can any of the company-specific risk be diversified away by investing in both Victory Supermarket 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 Victory Supermarket and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Supermarket Chain and American Airlines Group, you can compare the effects of market volatilities on Victory Supermarket 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 Victory Supermarket with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Supermarket and American Airlines.
Diversification Opportunities for Victory Supermarket and American Airlines
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Victory and American is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Victory Supermarket Chain and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Victory Supermarket 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 Victory Supermarket Chain 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 Victory Supermarket i.e., Victory Supermarket and American Airlines go up and down completely randomly.
Pair Corralation between Victory Supermarket and American Airlines
Assuming the 90 days trading horizon Victory Supermarket Chain is expected to generate 0.68 times more return on investment than American Airlines. However, Victory Supermarket Chain is 1.48 times less risky than American Airlines. It trades about 0.05 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.03 per unit of risk. If you would invest 473,838 in Victory Supermarket Chain on January 24, 2024 and sell it today you would earn a total of 5,662 from holding Victory Supermarket Chain or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Victory Supermarket Chain vs. American Airlines Group
Performance |
| Timeline |
| Victory Supermarket Chain |
| American Airlines |
Victory Supermarket and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Supermarket and American Airlines
The main advantage of trading using opposite Victory Supermarket and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Supermarket 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.| Victory Supermarket vs. Aryt Industries | Victory Supermarket vs. Scope Metals Group | Victory Supermarket vs. Delek Automotive Systems |
| 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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