Correlation Between American Airlines and Apartment Investment
Can any of the company-specific risk be diversified away by investing in both American Airlines and Apartment Investment 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 Apartment Investment 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 Apartment Investment and, you can compare the effects of market volatilities on American Airlines and Apartment Investment 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 Apartment Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Apartment Investment.
Diversification Opportunities for American Airlines and Apartment Investment
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Apartment is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and 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 Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of American Airlines i.e., American Airlines and Apartment Investment go up and down completely randomly.
Pair Corralation between American Airlines and Apartment Investment
Assuming the 90 days trading horizon American Airlines Group is expected to generate 1.21 times more return on investment than Apartment Investment. However, American Airlines is 1.21 times more volatile than Apartment Investment and. It trades about 0.19 of its potential returns per unit of risk. Apartment Investment and is currently generating about 0.02 per unit of risk. If you would invest 7,872 in American Airlines Group on August 29, 2024 and sell it today you would earn a total of 666.00 from holding American Airlines Group or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Airlines Group vs. Apartment Investment and
Performance |
| Timeline |
| American Airlines |
| Apartment Investment and |
American Airlines and Apartment Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Apartment Investment
The main advantage of trading using opposite American Airlines and Apartment Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Apartment Investment 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 Apartment Investment will offset losses from the drop in Apartment Investment's long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines Co | American Airlines vs. United Airlines Holdings | American Airlines vs. Gol Linhas Areas |
| Apartment Investment vs. AvalonBay Communities | Apartment Investment vs. Sun Communities | Apartment Investment vs. Essex Property 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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