Correlation Between American Airlines and International Consolidated
Can any of the company-specific risk be diversified away by investing in both American Airlines and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on American Airlines and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and International Consolidated.
Diversification Opportunities for American Airlines and International Consolidated
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and International is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of American Airlines i.e., American Airlines and International Consolidated go up and down completely randomly.
Pair Corralation between American Airlines and International Consolidated
Assuming the 90 days horizon American Airlines is expected to generate 4.23 times less return on investment than International Consolidated. In addition to that, American Airlines is 1.28 times more volatile than International Consolidated Airlines. It trades about 0.03 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.14 per unit of volatility. If you would invest 172.00 in International Consolidated Airlines on August 28, 2024 and sell it today you would earn a total of 122.00 from holding International Consolidated Airlines or generate 70.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.53% |
| Values | Daily Returns |
American Airlines Group vs. International Consolidated Air
Performance |
| Timeline |
| American Airlines |
| International Consolidated |
American Airlines and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and International Consolidated
The main advantage of trading using opposite American Airlines and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| American Airlines vs. GRIFFIN MINING LTD | American Airlines vs. Corporate Office Properties | American Airlines vs. Zijin Mining Group | American Airlines vs. Perseus Mining Limited |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |