Correlation Between American Airlines and Supernova Energy
Can any of the company-specific risk be diversified away by investing in both American Airlines and Supernova Energy 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 Supernova Energy 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 Supernova Energy, you can compare the effects of market volatilities on American Airlines and Supernova Energy 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 Supernova Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Supernova Energy.
Diversification Opportunities for American Airlines and Supernova Energy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Supernova is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Supernova Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernova Energy 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 Supernova Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernova Energy has no effect on the direction of American Airlines i.e., American Airlines and Supernova Energy go up and down completely randomly.
Pair Corralation between American Airlines and Supernova Energy
Considering the 90-day investment horizon American Airlines is expected to generate 27.28 times less return on investment than Supernova Energy. But when comparing it to its historical volatility, American Airlines Group is 8.28 times less risky than Supernova Energy. It trades about 0.02 of its potential returns per unit of risk. Supernova Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.90 in Supernova Energy on November 2, 2024 and sell it today you would lose (0.89) from holding Supernova Energy or give up 98.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Airlines Group vs. Supernova Energy
Performance |
| Timeline |
| American Airlines |
| Supernova Energy |
American Airlines and Supernova Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Supernova Energy
The main advantage of trading using opposite American Airlines and Supernova Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Supernova Energy 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 Supernova Energy will offset losses from the drop in Supernova Energy'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 |
| Supernova Energy vs. Cross Timbers Royalty | Supernova Energy vs. Kimbell Royalty Partners | Supernova Energy vs. Black Stone Minerals | Supernova Energy vs. VOC Energy Trust |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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