Correlation Between American Airlines and Covenant Logistics
Can any of the company-specific risk be diversified away by investing in both American Airlines and Covenant Logistics 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 Covenant Logistics 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 Covenant Logistics Group,, you can compare the effects of market volatilities on American Airlines and Covenant Logistics 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 Covenant Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Covenant Logistics.
Diversification Opportunities for American Airlines and Covenant Logistics
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Covenant is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Covenant Logistics Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covenant Logistics Group, 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 Covenant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covenant Logistics Group, has no effect on the direction of American Airlines i.e., American Airlines and Covenant Logistics go up and down completely randomly.
Pair Corralation between American Airlines and Covenant Logistics
Considering the 90-day investment horizon American Airlines is expected to generate 2.34 times less return on investment than Covenant Logistics. But when comparing it to its historical volatility, American Airlines Group is 1.22 times less risky than Covenant Logistics. It trades about 0.13 of its potential returns per unit of risk. Covenant Logistics Group, is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5,187 in Covenant Logistics Group, on August 27, 2024 and sell it today you would earn a total of 749.00 from holding Covenant Logistics Group, or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Covenant Logistics Group,
Performance |
| Timeline |
| American Airlines |
| Covenant Logistics Group, |
American Airlines and Covenant Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Covenant Logistics
The main advantage of trading using opposite American Airlines and Covenant Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Covenant Logistics 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 Covenant Logistics will offset losses from the drop in Covenant Logistics' long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
| Covenant Logistics vs. Marten Transport | Covenant Logistics vs. Werner Enterprises | Covenant Logistics vs. Universal Logistics Holdings | Covenant Logistics vs. Schneider National |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |