Correlation Between Akamai Technologies, and American Airlines
Can any of the company-specific risk be diversified away by investing in both Akamai Technologies, and American Airlines 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 Akamai Technologies, and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akamai Technologies, and American Airlines Group, you can compare the effects of market volatilities on Akamai Technologies, and American Airlines 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 Akamai Technologies, with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies, and American Airlines.
Diversification Opportunities for Akamai Technologies, and American Airlines
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Akamai and American is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies, and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Akamai Technologies, 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 Akamai Technologies, are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Akamai Technologies, i.e., Akamai Technologies, and American Airlines go up and down completely randomly.
Pair Corralation between Akamai Technologies, and American Airlines
Assuming the 90 days trading horizon Akamai Technologies, is expected to under-perform the American Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Akamai Technologies, is 1.55 times less risky than American Airlines. The stock trades about -0.22 of its potential returns per unit of risk. The American Airlines Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,427 in American Airlines Group on October 12, 2024 and sell it today you would earn a total of 154.00 from holding American Airlines Group or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akamai Technologies, vs. American Airlines Group
Performance |
| Timeline |
| Akamai Technologies, |
| American Airlines |
Akamai Technologies, and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akamai Technologies, and American Airlines
The main advantage of trading using opposite Akamai Technologies, and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akamai Technologies, position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Akamai Technologies, vs. Pentair plc | Akamai Technologies, vs. Air Products and | Akamai Technologies, vs. Metalrgica Riosulense SA | Akamai Technologies, vs. NXP Semiconductors NV |
| American Airlines vs. Akamai Technologies, | American Airlines vs. Trane Technologies plc | American Airlines vs. Live Nation Entertainment, | American Airlines vs. DXC Technology |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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