Correlation Between American Airlines and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both American Airlines and Grocery Outlet 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 Grocery Outlet 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 Grocery Outlet Holding, you can compare the effects of market volatilities on American Airlines and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Grocery Outlet.
Diversification Opportunities for American Airlines and Grocery Outlet
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Grocery is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of American Airlines i.e., American Airlines and Grocery Outlet go up and down completely randomly.
Pair Corralation between American Airlines and Grocery Outlet
Considering the 90-day investment horizon American Airlines Group is expected to generate 0.64 times more return on investment than Grocery Outlet. However, American Airlines Group is 1.56 times less risky than Grocery Outlet. It trades about 0.24 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.08 per unit of risk. If you would invest 1,039 in American Airlines Group on August 29, 2024 and sell it today you would earn a total of 425.00 from holding American Airlines Group or generate 40.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Grocery Outlet Holding
Performance |
| Timeline |
| American Airlines |
| Grocery Outlet Holding |
American Airlines and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Grocery Outlet
The main advantage of trading using opposite American Airlines and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| American Airlines vs. JetBlue Airways Corp | American Airlines vs. Allegiant Travel | American Airlines vs. SkyWest | American Airlines vs. International Consolidated Airlines |
| Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Sendas Distribuidora SA | Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Sprouts Farmers Market |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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