Correlation Between American Airlines and Vantage Towers
Can any of the company-specific risk be diversified away by investing in both American Airlines and Vantage Towers 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 Vantage Towers 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 Vantage Towers AG, you can compare the effects of market volatilities on American Airlines and Vantage Towers 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 Vantage Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Vantage Towers.
Diversification Opportunities for American Airlines and Vantage Towers
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Vantage is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Vantage Towers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vantage Towers AG 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 Vantage Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vantage Towers AG has no effect on the direction of American Airlines i.e., American Airlines and Vantage Towers go up and down completely randomly.
Pair Corralation between American Airlines and Vantage Towers
Considering the 90-day investment horizon American Airlines Group is expected to generate 2.92 times more return on investment than Vantage Towers. However, American Airlines is 2.92 times more volatile than Vantage Towers AG. It trades about 0.03 of its potential returns per unit of risk. Vantage Towers AG is currently generating about 0.05 per unit of risk. If you would invest 1,272 in American Airlines Group on September 20, 2024 and sell it today you would earn a total of 375.00 from holding American Airlines Group or generate 29.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Airlines Group vs. Vantage Towers AG
Performance |
| Timeline |
| American Airlines |
| Vantage Towers AG |
American Airlines and Vantage Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Vantage Towers
The main advantage of trading using opposite American Airlines and Vantage Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Vantage Towers 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 Vantage Towers will offset losses from the drop in Vantage Towers' 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 |
| Vantage Towers vs. Nascent Wine | Vantage Towers vs. Delta Air Lines | Vantage Towers vs. American Airlines Group | Vantage Towers vs. Copa Holdings SA |
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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