Correlation Between American Airlines and Ultra Clean
Can any of the company-specific risk be diversified away by investing in both American Airlines and Ultra Clean 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 Ultra Clean 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 Ultra Clean Holdings, you can compare the effects of market volatilities on American Airlines and Ultra Clean 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 Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Ultra Clean.
Diversification Opportunities for American Airlines and Ultra Clean
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Ultra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Ultra Clean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Clean Holdings 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 Ultra Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Clean Holdings has no effect on the direction of American Airlines i.e., American Airlines and Ultra Clean go up and down completely randomly.
Pair Corralation between American Airlines and Ultra Clean
Considering the 90-day investment horizon American Airlines Group is expected to generate 0.7 times more return on investment than Ultra Clean. However, American Airlines Group is 1.43 times less risky than Ultra Clean. It trades about 0.24 of its potential returns per unit of risk. Ultra Clean Holdings is currently generating about 0.02 per unit of risk. If you would invest 1,039 in American Airlines Group on August 29, 2024 and sell it today you would earn a total of 425.00 from holding American Airlines Group or generate 40.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Ultra Clean Holdings
Performance |
| Timeline |
| American Airlines |
| Ultra Clean Holdings |
American Airlines and Ultra Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Ultra Clean
The main advantage of trading using opposite American Airlines and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Ultra Clean 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 Ultra Clean will offset losses from the drop in Ultra Clean's long position.| American Airlines vs. JetBlue Airways Corp | American Airlines vs. Allegiant Travel | American Airlines vs. SkyWest | American Airlines vs. International Consolidated Airlines |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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