Correlation Between American Airlines and Elmos Semiconductor
Can any of the company-specific risk be diversified away by investing in both American Airlines and Elmos Semiconductor 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 Elmos Semiconductor 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 Elmos Semiconductor SE, you can compare the effects of market volatilities on American Airlines and Elmos Semiconductor 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 Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Elmos Semiconductor.
Diversification Opportunities for American Airlines and Elmos Semiconductor
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Elmos is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor 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 Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of American Airlines i.e., American Airlines and Elmos Semiconductor go up and down completely randomly.
Pair Corralation between American Airlines and Elmos Semiconductor
Assuming the 90 days horizon American Airlines Group is expected to generate 0.68 times more return on investment than Elmos Semiconductor. However, American Airlines Group is 1.47 times less risky than Elmos Semiconductor. It trades about 0.17 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about 0.07 per unit of risk. If you would invest 1,225 in American Airlines Group on September 4, 2024 and sell it today you would earn a total of 134.00 from holding American Airlines Group or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Elmos Semiconductor SE
Performance |
| Timeline |
| American Airlines |
| Elmos Semiconductor |
American Airlines and Elmos Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Elmos Semiconductor
The main advantage of trading using opposite American Airlines and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Elmos Semiconductor 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 Elmos Semiconductor will offset losses from the drop in Elmos Semiconductor'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 |
| Elmos Semiconductor vs. NVIDIA | Elmos Semiconductor vs. Taiwan Semiconductor Manufacturing | Elmos Semiconductor vs. Advanced Micro Devices | Elmos Semiconductor vs. Intel |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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