Correlation Between American Airlines and Graham Holdings
Can any of the company-specific risk be diversified away by investing in both American Airlines and Graham Holdings 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 Graham Holdings 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 Graham Holdings Co, you can compare the effects of market volatilities on American Airlines and Graham Holdings 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 Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Graham Holdings.
Diversification Opportunities for American Airlines and Graham Holdings
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Graham is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings 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 Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of American Airlines i.e., American Airlines and Graham Holdings go up and down completely randomly.
Pair Corralation between American Airlines and Graham Holdings
Assuming the 90 days horizon American Airlines is expected to generate 5.75 times less return on investment than Graham Holdings. In addition to that, American Airlines is 1.43 times more volatile than Graham Holdings Co. It trades about 0.01 of its total potential returns per unit of risk. Graham Holdings Co is currently generating about 0.09 per unit of volatility. If you would invest 53,127 in Graham Holdings Co on September 1, 2024 and sell it today you would earn a total of 35,373 from holding Graham Holdings Co or generate 66.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
American Airlines Group vs. Graham Holdings Co
Performance |
| Timeline |
| American Airlines |
| Graham Holdings |
American Airlines and Graham Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Graham Holdings
The main advantage of trading using opposite American Airlines and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' long position.| American Airlines vs. SERI INDUSTRIAL EO | American Airlines vs. GRIFFIN MINING LTD | American Airlines vs. Lion One Metals | American Airlines vs. Western Copper and |
| Graham Holdings vs. EAT WELL INVESTMENT | Graham Holdings vs. GRIFFIN MINING LTD | Graham Holdings vs. GREENX METALS LTD | Graham Holdings vs. Zijin Mining Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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