Correlation Between American Airlines and Copart
Can any of the company-specific risk be diversified away by investing in both American Airlines and Copart 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 Copart 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 Copart Inc, you can compare the effects of market volatilities on American Airlines and Copart 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 Copart. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Copart.
Diversification Opportunities for American Airlines and Copart
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Copart is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Copart Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copart 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 Copart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copart Inc has no effect on the direction of American Airlines i.e., American Airlines and Copart go up and down completely randomly.
Pair Corralation between American Airlines and Copart
Considering the 90-day investment horizon American Airlines Group is expected to generate 2.15 times more return on investment than Copart. However, American Airlines is 2.15 times more volatile than Copart Inc. It trades about 0.2 of its potential returns per unit of risk. Copart Inc is currently generating about -0.14 per unit of risk. If you would invest 1,735 in American Airlines Group on October 26, 2024 and sell it today you would earn a total of 131.00 from holding American Airlines Group or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Copart Inc
Performance |
| Timeline |
| American Airlines |
| Copart Inc |
American Airlines and Copart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Copart
The main advantage of trading using opposite American Airlines and Copart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Copart 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 Copart will offset losses from the drop in Copart's 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 |
| Copart vs. Global Payments | Copart vs. ABM Industries Incorporated | Copart vs. Thomson Reuters Corp | Copart vs. Aramark Holdings |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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