Correlation Between American Airlines and AMADEUS IT
Can any of the company-specific risk be diversified away by investing in both American Airlines and AMADEUS IT 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 AMADEUS IT 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 AMADEUS IT GRP, you can compare the effects of market volatilities on American Airlines and AMADEUS IT 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 AMADEUS IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and AMADEUS IT.
Diversification Opportunities for American Airlines and AMADEUS IT
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and AMADEUS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and AMADEUS IT GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMADEUS IT GRP 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 AMADEUS IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMADEUS IT GRP has no effect on the direction of American Airlines i.e., American Airlines and AMADEUS IT go up and down completely randomly.
Pair Corralation between American Airlines and AMADEUS IT
Assuming the 90 days horizon American Airlines Group is expected to generate 2.55 times more return on investment than AMADEUS IT. However, American Airlines is 2.55 times more volatile than AMADEUS IT GRP. It trades about 0.31 of its potential returns per unit of risk. AMADEUS IT GRP is currently generating about 0.09 per unit of risk. If you would invest 999.00 in American Airlines Group on September 3, 2024 and sell it today you would earn a total of 427.00 from holding American Airlines Group or generate 42.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. AMADEUS IT GRP
Performance |
| Timeline |
| American Airlines |
| AMADEUS IT GRP |
American Airlines and AMADEUS IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and AMADEUS IT
The main advantage of trading using opposite American Airlines and AMADEUS IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, AMADEUS IT 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 AMADEUS IT will offset losses from the drop in AMADEUS IT's long position.| American Airlines vs. Delta Air Lines | American Airlines vs. AIR CHINA LTD | American Airlines vs. RYANAIR HLDGS ADR | American Airlines vs. Southwest Airlines Co |
| AMADEUS IT vs. Goosehead Insurance | AMADEUS IT vs. Ping An Insurance | AMADEUS IT vs. Direct Line Insurance | AMADEUS IT vs. Perdoceo Education |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |