Correlation Between CITY OFFICE and American Airlines
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE 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 CITY OFFICE and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITY OFFICE REIT and American Airlines Group, you can compare the effects of market volatilities on CITY OFFICE 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 CITY OFFICE with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and American Airlines.
Diversification Opportunities for CITY OFFICE and American Airlines
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CITY and American is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and CITY OFFICE 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 CITY OFFICE REIT 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 CITY OFFICE i.e., CITY OFFICE and American Airlines go up and down completely randomly.
Pair Corralation between CITY OFFICE and American Airlines
Assuming the 90 days horizon CITY OFFICE is expected to generate 2.69 times less return on investment than American Airlines. In addition to that, CITY OFFICE is 1.28 times more volatile than American Airlines Group. It trades about 0.0 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.02 per unit of volatility. If you would invest 1,398 in American Airlines Group on December 1, 2024 and sell it today you would earn a total of 45.00 from holding American Airlines Group or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. American Airlines Group
Performance |
| Timeline |
| CITY OFFICE REIT |
| American Airlines |
CITY OFFICE and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and American Airlines
The main advantage of trading using opposite CITY OFFICE and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE 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.| CITY OFFICE vs. AEGEAN AIRLINES | CITY OFFICE vs. VARIOUS EATERIES LS | CITY OFFICE vs. MidCap Financial Investment | CITY OFFICE vs. SLR Investment Corp |
| American Airlines vs. Retail Estates NV | American Airlines vs. GUILD ESPORTS PLC | American Airlines vs. Air Transport Services | American Airlines vs. Yuexiu Transport Infrastructure |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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