Correlation Between Western Copper and American Airlines
Can any of the company-specific risk be diversified away by investing in both Western Copper 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 Western Copper and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and American Airlines Group, you can compare the effects of market volatilities on Western Copper 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 Western Copper with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and American Airlines.
Diversification Opportunities for Western Copper and American Airlines
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and American is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Western Copper 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 Western Copper and 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 Western Copper i.e., Western Copper and American Airlines go up and down completely randomly.
Pair Corralation between Western Copper and American Airlines
Assuming the 90 days trading horizon Western Copper is expected to generate 1.91 times less return on investment than American Airlines. In addition to that, Western Copper is 1.56 times more volatile than American Airlines Group. It trades about 0.08 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.24 per unit of volatility. If you would invest 1,232 in American Airlines Group on September 1, 2024 and sell it today you would earn a total of 194.00 from holding American Airlines Group or generate 15.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. American Airlines Group
Performance |
| Timeline |
| Western Copper |
| American Airlines |
Western Copper and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and American Airlines
The main advantage of trading using opposite Western Copper and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper 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.| Western Copper vs. BHP Group Limited | Western Copper vs. Rio Tinto Group | Western Copper vs. Rio Tinto Group | Western Copper vs. Vale SA |
| American Airlines vs. SERI INDUSTRIAL EO | American Airlines vs. GRIFFIN MINING LTD | American Airlines vs. Lion One Metals | American Airlines vs. Western Copper and |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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