Correlation Between American Airlines and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both American Airlines and Perseus Mining 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 Perseus Mining 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 Perseus Mining Limited, you can compare the effects of market volatilities on American Airlines and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Perseus Mining.
Diversification Opportunities for American Airlines and Perseus Mining
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Perseus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of American Airlines i.e., American Airlines and Perseus Mining go up and down completely randomly.
Pair Corralation between American Airlines and Perseus Mining
Assuming the 90 days horizon American Airlines Group is expected to generate 1.9 times more return on investment than Perseus Mining. However, American Airlines is 1.9 times more volatile than Perseus Mining Limited. It trades about 0.3 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.18 per unit of risk. If you would invest 1,287 in American Airlines Group on September 14, 2024 and sell it today you would earn a total of 392.00 from holding American Airlines Group or generate 30.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Perseus Mining Limited
Performance |
| Timeline |
| American Airlines |
| Perseus Mining |
American Airlines and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Perseus Mining
The main advantage of trading using opposite American Airlines and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining's long position.| American Airlines vs. RYANAIR HLDGS ADR | American Airlines vs. Ryanair Holdings plc | American Airlines vs. Superior Plus Corp | American Airlines vs. SIVERS SEMICONDUCTORS AB |
| Perseus Mining vs. Franco Nevada | Perseus Mining vs. Superior Plus Corp | Perseus Mining vs. SIVERS SEMICONDUCTORS AB | Perseus Mining vs. Norsk Hydro ASA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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