Correlation Between American Airlines and DATAGROUP
Can any of the company-specific risk be diversified away by investing in both American Airlines and DATAGROUP 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 DATAGROUP 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 DATAGROUP SE, you can compare the effects of market volatilities on American Airlines and DATAGROUP 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 DATAGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and DATAGROUP.
Diversification Opportunities for American Airlines and DATAGROUP
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and DATAGROUP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP SE 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 DATAGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATAGROUP SE has no effect on the direction of American Airlines i.e., American Airlines and DATAGROUP go up and down completely randomly.
Pair Corralation between American Airlines and DATAGROUP
Assuming the 90 days horizon American Airlines Group is expected to generate 1.16 times more return on investment than DATAGROUP. However, American Airlines is 1.16 times more volatile than DATAGROUP SE. It trades about 0.01 of its potential returns per unit of risk. DATAGROUP SE is currently generating about -0.02 per unit of risk. If you would invest 1,450 in American Airlines Group on September 4, 2024 and sell it today you would lose (91.00) from holding American Airlines Group or give up 6.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. DATAGROUP SE
Performance |
| Timeline |
| American Airlines |
| DATAGROUP SE |
American Airlines and DATAGROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and DATAGROUP
The main advantage of trading using opposite American Airlines and DATAGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, DATAGROUP 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 DATAGROUP will offset losses from the drop in DATAGROUP'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 |
| DATAGROUP vs. FUJITSU LTD ADR | DATAGROUP vs. Superior Plus Corp | DATAGROUP vs. NMI Holdings | DATAGROUP vs. Origin Agritech |
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 Stocks Directory module to find actively traded stocks across global markets.
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