Correlation Between American Airlines and Monogram Orthopaedics
Can any of the company-specific risk be diversified away by investing in both American Airlines and Monogram Orthopaedics 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 Monogram Orthopaedics 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 Monogram Orthopaedics Common, you can compare the effects of market volatilities on American Airlines and Monogram Orthopaedics 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 Monogram Orthopaedics. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Monogram Orthopaedics.
Diversification Opportunities for American Airlines and Monogram Orthopaedics
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Monogram is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Monogram Orthopaedics Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monogram Orthopaedics 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 Monogram Orthopaedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monogram Orthopaedics has no effect on the direction of American Airlines i.e., American Airlines and Monogram Orthopaedics go up and down completely randomly.
Pair Corralation between American Airlines and Monogram Orthopaedics
Considering the 90-day investment horizon American Airlines Group is expected to generate 0.76 times more return on investment than Monogram Orthopaedics. However, American Airlines Group is 1.31 times less risky than Monogram Orthopaedics. It trades about 0.29 of its potential returns per unit of risk. Monogram Orthopaedics Common is currently generating about 0.17 per unit of risk. If you would invest 1,391 in American Airlines Group on September 13, 2024 and sell it today you would earn a total of 353.50 from holding American Airlines Group or generate 25.41% 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. Monogram Orthopaedics Common
Performance |
| Timeline |
| American Airlines |
| Monogram Orthopaedics |
American Airlines and Monogram Orthopaedics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Monogram Orthopaedics
The main advantage of trading using opposite American Airlines and Monogram Orthopaedics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Monogram Orthopaedics 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 Monogram Orthopaedics will offset losses from the drop in Monogram Orthopaedics' 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 |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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