Correlation Between American Airlines and Global Crossing
Can any of the company-specific risk be diversified away by investing in both American Airlines and Global Crossing 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 Global Crossing 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 Global Crossing Airlines, you can compare the effects of market volatilities on American Airlines and Global Crossing 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 Global Crossing. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Global Crossing.
Diversification Opportunities for American Airlines and Global Crossing
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Global is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Global Crossing Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Crossing Airlines 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 Global Crossing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Crossing Airlines has no effect on the direction of American Airlines i.e., American Airlines and Global Crossing go up and down completely randomly.
Pair Corralation between American Airlines and Global Crossing
Considering the 90-day investment horizon American Airlines Group is expected to generate 0.54 times more return on investment than Global Crossing. However, American Airlines Group is 1.84 times less risky than Global Crossing. It trades about 0.02 of its potential returns per unit of risk. Global Crossing Airlines is currently generating about -0.01 per unit of risk. If you would invest 1,651 in American Airlines Group on November 2, 2024 and sell it today you would earn a total of 63.00 from holding American Airlines Group or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Global Crossing Airlines
Performance |
| Timeline |
| American Airlines |
| Global Crossing Airlines |
American Airlines and Global Crossing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Global Crossing
The main advantage of trading using opposite American Airlines and Global Crossing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Global Crossing 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 Global Crossing will offset losses from the drop in Global Crossing'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 |
| Global Crossing vs. Finnair Oyj | Global Crossing vs. easyJet plc | Global Crossing vs. Norse Atlantic ASA | Global Crossing vs. Air New Zealand |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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