Correlation Between American Airlines and SYSTEMAIR
Can any of the company-specific risk be diversified away by investing in both American Airlines and SYSTEMAIR 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 SYSTEMAIR 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 SYSTEMAIR AB, you can compare the effects of market volatilities on American Airlines and SYSTEMAIR 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 SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and SYSTEMAIR.
Diversification Opportunities for American Airlines and SYSTEMAIR
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and SYSTEMAIR is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB 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 SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of American Airlines i.e., American Airlines and SYSTEMAIR go up and down completely randomly.
Pair Corralation between American Airlines and SYSTEMAIR
Assuming the 90 days horizon American Airlines is expected to generate 3.63 times less return on investment than SYSTEMAIR. But when comparing it to its historical volatility, American Airlines Group is 1.17 times less risky than SYSTEMAIR. It trades about 0.02 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 449.00 in SYSTEMAIR AB on November 21, 2024 and sell it today you would earn a total of 308.00 from holding SYSTEMAIR AB or generate 68.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
American Airlines Group vs. SYSTEMAIR AB
Performance |
Timeline |
American Airlines |
SYSTEMAIR AB |
American Airlines and SYSTEMAIR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Airlines and SYSTEMAIR
The main advantage of trading using opposite American Airlines and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, SYSTEMAIR 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 SYSTEMAIR will offset losses from the drop in SYSTEMAIR's long position.American Airlines vs. UNIQA INSURANCE GR | ||
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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