Correlation Between American Airlines and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both American Airlines and Evolution 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 Evolution 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 Evolution Mining Limited, you can compare the effects of market volatilities on American Airlines and Evolution 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Evolution Mining.
Diversification Opportunities for American Airlines and Evolution Mining
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Evolution is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of American Airlines i.e., American Airlines and Evolution Mining go up and down completely randomly.
Pair Corralation between American Airlines and Evolution Mining
Assuming the 90 days horizon American Airlines Group is expected to generate 1.08 times more return on investment than Evolution Mining. However, American Airlines is 1.08 times more volatile than Evolution Mining Limited. It trades about 0.05 of its potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.04 per unit of risk. If you would invest 1,254 in American Airlines Group on September 24, 2024 and sell it today you would earn a total of 376.00 from holding American Airlines Group or generate 29.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Evolution Mining Limited
Performance |
| Timeline |
| American Airlines |
| Evolution Mining |
American Airlines and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Evolution Mining
The main advantage of trading using opposite American Airlines and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Evolution 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 Evolution Mining will offset losses from the drop in Evolution Mining's long position.| American Airlines vs. JD SPORTS FASH | American Airlines vs. Gaztransport Technigaz SA | American Airlines vs. SIEM OFFSHORE NEW | American Airlines vs. CarsalesCom |
| Evolution Mining vs. Waste Management | Evolution Mining vs. SALESFORCE INC CDR | Evolution Mining vs. CARSALESCOM | Evolution Mining vs. Gruppo Mutuionline SpA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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