Correlation Between American Airlines and Beyond Meat
Can any of the company-specific risk be diversified away by investing in both American Airlines and Beyond Meat 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 Beyond Meat 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 Beyond Meat, you can compare the effects of market volatilities on American Airlines and Beyond Meat 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 Beyond Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Beyond Meat.
Diversification Opportunities for American Airlines and Beyond Meat
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Beyond is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat 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 Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of American Airlines i.e., American Airlines and Beyond Meat go up and down completely randomly.
Pair Corralation between American Airlines and Beyond Meat
Considering the 90-day investment horizon American Airlines Group is expected to generate 0.51 times more return on investment than Beyond Meat. However, American Airlines Group is 1.96 times less risky than Beyond Meat. It trades about 0.18 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.19 per unit of risk. If you would invest 1,340 in American Airlines Group on September 1, 2024 and sell it today you would earn a total of 112.00 from holding American Airlines Group or generate 8.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Beyond Meat
Performance |
| Timeline |
| American Airlines |
| Beyond Meat |
American Airlines and Beyond Meat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Beyond Meat
The main advantage of trading using opposite American Airlines and Beyond Meat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Beyond Meat 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 Beyond Meat will offset losses from the drop in Beyond Meat's long position.| American Airlines vs. Canadian Pacific Railway | American Airlines vs. Volaris | American Airlines vs. Werner Enterprises | American Airlines vs. Canadian National Railway |
| Beyond Meat vs. Kraft Heinz Co | Beyond Meat vs. Hormel Foods | Beyond Meat vs. Kellanova | Beyond Meat vs. General Mills |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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