Correlation Between American Airlines and Skandinaviska Enskilda
Can any of the company-specific risk be diversified away by investing in both American Airlines and Skandinaviska Enskilda 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 Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on American Airlines and Skandinaviska Enskilda 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 Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Skandinaviska Enskilda.
Diversification Opportunities for American Airlines and Skandinaviska Enskilda
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Skandinaviska is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda 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 Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of American Airlines i.e., American Airlines and Skandinaviska Enskilda go up and down completely randomly.
Pair Corralation between American Airlines and Skandinaviska Enskilda
Assuming the 90 days horizon American Airlines Group is expected to generate 3.44 times more return on investment than Skandinaviska Enskilda. However, American Airlines is 3.44 times more volatile than Skandinaviska Enskilda Banken. It trades about 0.26 of its potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.08 per unit of risk. If you would invest 1,290 in American Airlines Group on September 12, 2024 and sell it today you would earn a total of 344.00 from holding American Airlines Group or generate 26.67% 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. Skandinaviska Enskilda Banken
Performance |
| Timeline |
| American Airlines |
| Skandinaviska Enskilda |
American Airlines and Skandinaviska Enskilda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Skandinaviska Enskilda
The main advantage of trading using opposite American Airlines and Skandinaviska Enskilda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Skandinaviska Enskilda 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 Skandinaviska Enskilda will offset losses from the drop in Skandinaviska Enskilda's long position.| American Airlines vs. Renesas Electronics | American Airlines vs. UMC Electronics Co | American Airlines vs. CARSALESCOM | American Airlines vs. STMICROELECTRONICS |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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