Correlation Between American Airlines and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both American Airlines and Treasury Wine 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 Treasury Wine 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 Treasury Wine Estates, you can compare the effects of market volatilities on American Airlines and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Treasury Wine.
Diversification Opportunities for American Airlines and Treasury Wine
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Treasury is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of American Airlines i.e., American Airlines and Treasury Wine go up and down completely randomly.
Pair Corralation between American Airlines and Treasury Wine
Considering the 90-day investment horizon American Airlines Group is expected to generate 0.99 times more return on investment than Treasury Wine. However, American Airlines Group is 1.01 times less risky than Treasury Wine. It trades about 0.23 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.05 per unit of risk. If you would invest 1,156 in American Airlines Group on August 28, 2024 and sell it today you would earn a total of 308.00 from holding American Airlines Group or generate 26.64% 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. Treasury Wine Estates
Performance |
| Timeline |
| American Airlines |
| Treasury Wine Estates |
American Airlines and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Treasury Wine
The main advantage of trading using opposite American Airlines and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine'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 |
| Treasury Wine vs. Diageo PLC ADR | Treasury Wine vs. Constellation Brands Class | Treasury Wine vs. Morningstar Unconstrained Allocation | Treasury Wine vs. SEI Investments |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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