Correlation Between American Airlines and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both American Airlines and JD SPORTS 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 JD SPORTS 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 JD SPORTS FASH, you can compare the effects of market volatilities on American Airlines and JD SPORTS 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 JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and JD SPORTS.
Diversification Opportunities for American Airlines and JD SPORTS
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and 9JD is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH 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 JD SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD SPORTS FASH has no effect on the direction of American Airlines i.e., American Airlines and JD SPORTS go up and down completely randomly.
Pair Corralation between American Airlines and JD SPORTS
Assuming the 90 days horizon American Airlines Group is expected to generate 0.92 times more return on investment than JD SPORTS. However, American Airlines Group is 1.08 times less risky than JD SPORTS. It trades about 0.21 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.13 per unit of risk. If you would invest 953.00 in American Airlines Group on August 31, 2024 and sell it today you would earn a total of 426.00 from holding American Airlines Group or generate 44.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. JD SPORTS FASH
Performance |
| Timeline |
| American Airlines |
| JD SPORTS FASH |
American Airlines and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and JD SPORTS
The main advantage of trading using opposite American Airlines and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, JD SPORTS 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 JD SPORTS will offset losses from the drop in JD SPORTS's long position.| American Airlines vs. RYANAIR HLDGS ADR | American Airlines vs. Southwest Airlines Co | American Airlines vs. Ryanair Holdings plc | American Airlines vs. Superior Plus Corp |
| JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. AOYAMA TRADING | JD SPORTS vs. Global Fashion Group | JD SPORTS vs. Superior Plus Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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