Correlation Between American Airlines and REINET INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both American Airlines and REINET INVESTMENTS 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA, you can compare the effects of market volatilities on American Airlines and REINET INVESTMENTS 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 REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and REINET INVESTMENTS.
Diversification Opportunities for American Airlines and REINET INVESTMENTS
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and REINET is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of American Airlines i.e., American Airlines and REINET INVESTMENTS go up and down completely randomly.
Pair Corralation between American Airlines and REINET INVESTMENTS
Assuming the 90 days horizon American Airlines Group is expected to under-perform the REINET INVESTMENTS. But the stock apears to be less risky and, when comparing its historical volatility, American Airlines Group is 1.14 times less risky than REINET INVESTMENTS. The stock trades about -0.01 of its potential returns per unit of risk. The REINET INVESTMENTS SCA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,400 in REINET INVESTMENTS SCA on November 4, 2024 and sell it today you would earn a total of 20.00 from holding REINET INVESTMENTS SCA or generate 0.83% 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. REINET INVESTMENTS SCA
Performance |
| Timeline |
| American Airlines |
| REINET INVESTMENTS SCA |
American Airlines and REINET INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and REINET INVESTMENTS
The main advantage of trading using opposite American Airlines and REINET INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, REINET INVESTMENTS 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 REINET INVESTMENTS will offset losses from the drop in REINET INVESTMENTS's long position.| American Airlines vs. De Grey Mining | American Airlines vs. NAGOYA RAILROAD | American Airlines vs. EVS Broadcast Equipment | American Airlines vs. COPLAND ROAD CAPITAL |
| REINET INVESTMENTS vs. ARROW ELECTRONICS | REINET INVESTMENTS vs. UMC Electronics Co | REINET INVESTMENTS vs. Arrow Electronics | REINET INVESTMENTS vs. Benchmark Electronics |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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