Correlation Between American Airlines and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both American Airlines and FAST RETAIL 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 FAST RETAIL 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 FAST RETAIL ADR, you can compare the effects of market volatilities on American Airlines and FAST RETAIL 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 FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and FAST RETAIL.
Diversification Opportunities for American Airlines and FAST RETAIL
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and FAST is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of American Airlines i.e., American Airlines and FAST RETAIL go up and down completely randomly.
Pair Corralation between American Airlines and FAST RETAIL
Assuming the 90 days horizon American Airlines Group is expected to generate 1.86 times more return on investment than FAST RETAIL. However, American Airlines is 1.86 times more volatile than FAST RETAIL ADR. It trades about 0.23 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.16 per unit of risk. If you would invest 994.00 in American Airlines Group on September 12, 2024 and sell it today you would earn a total of 640.00 from holding American Airlines Group or generate 64.39% 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. FAST RETAIL ADR
Performance |
| Timeline |
| American Airlines |
| FAST RETAIL ADR |
American Airlines and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and FAST RETAIL
The main advantage of trading using opposite American Airlines and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| American Airlines vs. Renesas Electronics | American Airlines vs. UMC Electronics Co | American Airlines vs. CARSALESCOM | American Airlines vs. STMICROELECTRONICS |
| FAST RETAIL vs. CCC SA | FAST RETAIL vs. AOYAMA TRADING | FAST RETAIL vs. Superior Plus Corp | FAST RETAIL vs. SIVERS SEMICONDUCTORS AB |
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 CEOs Directory module to screen CEOs from public companies around the world.
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