Correlation Between American Airlines and Global Ship
Can any of the company-specific risk be diversified away by investing in both American Airlines and Global Ship 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 American Airlines and Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and Global Ship Lease, you can compare the effects of market volatilities on American Airlines and Global Ship 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 American Airlines with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Global Ship.
Diversification Opportunities for American Airlines and Global Ship
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Global is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and American Airlines 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 American Airlines Group are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of American Airlines i.e., American Airlines and Global Ship go up and down completely randomly.
Pair Corralation between American Airlines and Global Ship
Assuming the 90 days horizon American Airlines Group is expected to generate 1.29 times more return on investment than Global Ship. However, American Airlines is 1.29 times more volatile than Global Ship Lease. It trades about 0.12 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.06 per unit of risk. If you would invest 1,634 in American Airlines Group on October 11, 2024 and sell it today you would earn a total of 91.00 from holding American Airlines Group or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Global Ship Lease
Performance |
| Timeline |
| American Airlines |
| Global Ship Lease |
American Airlines and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Global Ship
The main advantage of trading using opposite American Airlines and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| American Airlines vs. INDOFOOD AGRI RES | American Airlines vs. TYSON FOODS A | American Airlines vs. Performance Food Group | American Airlines vs. INTERSHOP Communications Aktiengesellschaft |
| Global Ship vs. CEOTRONICS | Global Ship vs. Coor Service Management | Global Ship vs. Pure Storage | Global Ship vs. LANDSEA GREEN MANAGEMENT |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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