Correlation Between American Airlines and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both American Airlines and WisdomTree Investments 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 WisdomTree Investments 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 WisdomTree Investments, you can compare the effects of market volatilities on American Airlines and WisdomTree Investments 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 WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and WisdomTree Investments.
Diversification Opportunities for American Airlines and WisdomTree Investments
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and WisdomTree is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments 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 WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of American Airlines i.e., American Airlines and WisdomTree Investments go up and down completely randomly.
Pair Corralation between American Airlines and WisdomTree Investments
If you would invest 1,430 in American Airlines Group on September 14, 2024 and sell it today you would earn a total of 266.00 from holding American Airlines Group or generate 18.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
American Airlines Group vs. WisdomTree Investments
Performance |
| Timeline |
| American Airlines |
| WisdomTree Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Airlines and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and WisdomTree Investments
The main advantage of trading using opposite American Airlines and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, WisdomTree Investments 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 WisdomTree Investments will offset losses from the drop in WisdomTree Investments' long position.| American Airlines vs. Southwest Airlines | American Airlines vs. United Airlines Holdings | American Airlines vs. Frontier Group Holdings |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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