Correlation Between American Airlines and Apple
Can any of the company-specific risk be diversified away by investing in both American Airlines and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on American Airlines and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Apple.
Diversification Opportunities for American Airlines and Apple
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Apple is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of American Airlines i.e., American Airlines and Apple go up and down completely randomly.
Pair Corralation between American Airlines and Apple
Considering the 90-day investment horizon American Airlines Group is expected to generate 2.09 times more return on investment than Apple. However, American Airlines is 2.09 times more volatile than Apple Inc. It trades about 0.22 of its potential returns per unit of risk. Apple Inc is currently generating about -0.11 per unit of risk. If you would invest 1,296 in American Airlines Group on August 23, 2024 and sell it today you would earn a total of 150.00 from holding American Airlines Group or generate 11.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Airlines Group vs. Apple Inc
Performance |
| Timeline |
| American Airlines |
| Apple Inc |
American Airlines and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Apple
The main advantage of trading using opposite American Airlines and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| American Airlines vs. Canadian Pacific Railway | American Airlines vs. Werner Enterprises | American Airlines vs. Canadian National Railway | American Airlines vs. CSX Corporation |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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