Correlation Between American Airlines and Nippon Light
Can any of the company-specific risk be diversified away by investing in both American Airlines and Nippon Light 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 Nippon Light 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 Nippon Light Metal, you can compare the effects of market volatilities on American Airlines and Nippon Light 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 Nippon Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Nippon Light.
Diversification Opportunities for American Airlines and Nippon Light
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Nippon is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Nippon Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Light Metal 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 Nippon Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Light Metal has no effect on the direction of American Airlines i.e., American Airlines and Nippon Light go up and down completely randomly.
Pair Corralation between American Airlines and Nippon Light
Assuming the 90 days horizon American Airlines Group is expected to generate 1.5 times more return on investment than Nippon Light. However, American Airlines is 1.5 times more volatile than Nippon Light Metal. It trades about 0.09 of its potential returns per unit of risk. Nippon Light Metal is currently generating about -0.04 per unit of risk. If you would invest 1,063 in American Airlines Group on September 3, 2024 and sell it today you would earn a total of 296.00 from holding American Airlines Group or generate 27.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Nippon Light Metal
Performance |
| Timeline |
| American Airlines |
| Nippon Light Metal |
American Airlines and Nippon Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Nippon Light
The main advantage of trading using opposite American Airlines and Nippon Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Nippon Light 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 Nippon Light will offset losses from the drop in Nippon Light'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 |
| Nippon Light vs. Playa Hotels Resorts | Nippon Light vs. Silicon Motion Technology | Nippon Light vs. VIVA WINE GROUP | Nippon Light vs. Park Hotels Resorts |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |