Correlation Between American Airlines and Steven Madden
Can any of the company-specific risk be diversified away by investing in both American Airlines and Steven Madden 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 Steven Madden 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 Steven Madden, you can compare the effects of market volatilities on American Airlines and Steven Madden 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 Steven Madden. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Steven Madden.
Diversification Opportunities for American Airlines and Steven Madden
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Steven is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Steven Madden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steven Madden 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 Steven Madden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steven Madden has no effect on the direction of American Airlines i.e., American Airlines and Steven Madden go up and down completely randomly.
Pair Corralation between American Airlines and Steven Madden
Considering the 90-day investment horizon American Airlines Group is expected to generate 1.14 times more return on investment than Steven Madden. However, American Airlines is 1.14 times more volatile than Steven Madden. It trades about 0.16 of its potential returns per unit of risk. Steven Madden is currently generating about 0.05 per unit of risk. If you would invest 1,354 in American Airlines Group on September 2, 2024 and sell it today you would earn a total of 98.00 from holding American Airlines Group or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Steven Madden
Performance |
| Timeline |
| American Airlines |
| Steven Madden |
American Airlines and Steven Madden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Steven Madden
The main advantage of trading using opposite American Airlines and Steven Madden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Steven Madden 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 Steven Madden will offset losses from the drop in Steven Madden's long position.| American Airlines vs. Canadian Pacific Railway | American Airlines vs. Werner Enterprises | American Airlines vs. Canadian National Railway | American Airlines vs. CSX Corporation |
| Steven Madden vs. Weyco Group | Steven Madden vs. Caleres | Steven Madden vs. Rocky Brands | Steven Madden vs. Designer Brands |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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