Correlation Between American Airlines and Naturgy Energy
Can any of the company-specific risk be diversified away by investing in both American Airlines and Naturgy Energy 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 Naturgy Energy 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 Naturgy Energy Group, you can compare the effects of market volatilities on American Airlines and Naturgy Energy 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 Naturgy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Naturgy Energy.
Diversification Opportunities for American Airlines and Naturgy Energy
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Naturgy is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Naturgy Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy Energy 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 Naturgy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy Energy Group has no effect on the direction of American Airlines i.e., American Airlines and Naturgy Energy go up and down completely randomly.
Pair Corralation between American Airlines and Naturgy Energy
Considering the 90-day investment horizon American Airlines Group is expected to generate 1.54 times more return on investment than Naturgy Energy. However, American Airlines is 1.54 times more volatile than Naturgy Energy Group. It trades about 0.01 of its potential returns per unit of risk. Naturgy Energy Group is currently generating about 0.0 per unit of risk. If you would invest 1,411 in American Airlines Group on August 24, 2024 and sell it today you would earn a total of 27.00 from holding American Airlines Group or generate 1.91% 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. Naturgy Energy Group
Performance |
| Timeline |
| American Airlines |
| Naturgy Energy Group |
American Airlines and Naturgy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Naturgy Energy
The main advantage of trading using opposite American Airlines and Naturgy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Naturgy Energy 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 Naturgy Energy will offset losses from the drop in Naturgy Energy's long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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