Correlation Between American Airlines and Analog Devices
Can any of the company-specific risk be diversified away by investing in both American Airlines and Analog Devices 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 Analog Devices 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 Analog Devices, you can compare the effects of market volatilities on American Airlines and Analog Devices 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 Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Analog Devices.
Diversification Opportunities for American Airlines and Analog Devices
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Analog is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of American Airlines i.e., American Airlines and Analog Devices go up and down completely randomly.
Pair Corralation between American Airlines and Analog Devices
Considering the 90-day investment horizon American Airlines Group is expected to generate 1.04 times more return on investment than Analog Devices. However, American Airlines is 1.04 times more volatile than Analog Devices. It trades about 0.28 of its potential returns per unit of risk. Analog Devices is currently generating about -0.06 per unit of risk. If you would invest 1,299 in American Airlines Group on September 3, 2024 and sell it today you would earn a total of 153.00 from holding American Airlines Group or generate 11.78% 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. Analog Devices
Performance |
| Timeline |
| American Airlines |
| Analog Devices |
American Airlines and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Analog Devices
The main advantage of trading using opposite American Airlines and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. United Airlines Holdings |
| Analog Devices vs. Silicon Motion Technology | Analog Devices vs. ASE Industrial Holding | Analog Devices vs. SemiLEDS | Analog Devices vs. Advanced Micro Devices |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |