Correlation Between American Airlines and DALATA HOTEL
Can any of the company-specific risk be diversified away by investing in both American Airlines and DALATA HOTEL 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 DALATA HOTEL 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 DALATA HOTEL, you can compare the effects of market volatilities on American Airlines and DALATA HOTEL 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 DALATA HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and DALATA HOTEL.
Diversification Opportunities for American Airlines and DALATA HOTEL
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and DALATA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and DALATA HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DALATA HOTEL 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 DALATA HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DALATA HOTEL has no effect on the direction of American Airlines i.e., American Airlines and DALATA HOTEL go up and down completely randomly.
Pair Corralation between American Airlines and DALATA HOTEL
Assuming the 90 days horizon American Airlines Group is expected to under-perform the DALATA HOTEL. In addition to that, American Airlines is 1.08 times more volatile than DALATA HOTEL. It trades about -0.05 of its total potential returns per unit of risk. DALATA HOTEL is currently generating about -0.02 per unit of volatility. If you would invest 442.00 in DALATA HOTEL on October 29, 2024 and sell it today you would lose (8.00) from holding DALATA HOTEL or give up 1.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. DALATA HOTEL
Performance |
| Timeline |
| American Airlines |
| DALATA HOTEL |
American Airlines and DALATA HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and DALATA HOTEL
The main advantage of trading using opposite American Airlines and DALATA HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, DALATA HOTEL 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 DALATA HOTEL will offset losses from the drop in DALATA HOTEL's long position.| American Airlines vs. UNIQA INSURANCE GR | American Airlines vs. QBE Insurance Group | American Airlines vs. Direct Line Insurance | American Airlines vs. Singapore Telecommunications Limited |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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