Correlation Between American Airlines and Informa PLC
Can any of the company-specific risk be diversified away by investing in both American Airlines and Informa PLC 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 Informa PLC 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 Informa PLC ADR, you can compare the effects of market volatilities on American Airlines and Informa PLC 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 Informa PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Informa PLC.
Diversification Opportunities for American Airlines and Informa PLC
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Informa is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Informa PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informa PLC ADR 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 Informa PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informa PLC ADR has no effect on the direction of American Airlines i.e., American Airlines and Informa PLC go up and down completely randomly.
Pair Corralation between American Airlines and Informa PLC
Considering the 90-day investment horizon American Airlines is expected to generate 2.77 times less return on investment than Informa PLC. In addition to that, American Airlines is 1.72 times more volatile than Informa PLC ADR. It trades about 0.01 of its total potential returns per unit of risk. Informa PLC ADR is currently generating about 0.06 per unit of volatility. If you would invest 1,457 in Informa PLC ADR on August 27, 2024 and sell it today you would earn a total of 655.00 from holding Informa PLC ADR or generate 44.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Airlines Group vs. Informa PLC ADR
Performance |
| Timeline |
| American Airlines |
| Informa PLC ADR |
American Airlines and Informa PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Informa PLC
The main advantage of trading using opposite American Airlines and Informa PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Informa PLC 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 Informa PLC will offset losses from the drop in Informa PLC'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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