Correlation Between American Airlines and Align Technology
Can any of the company-specific risk be diversified away by investing in both American Airlines and Align Technology 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 Align Technology 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 Align Technology, you can compare the effects of market volatilities on American Airlines and Align Technology 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 Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Align Technology.
Diversification Opportunities for American Airlines and Align Technology
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Align is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of American Airlines i.e., American Airlines and Align Technology go up and down completely randomly.
Pair Corralation between American Airlines and Align Technology
Assuming the 90 days trading horizon American Airlines is expected to generate 1.53 times less return on investment than Align Technology. In addition to that, American Airlines is 1.23 times more volatile than Align Technology. It trades about 0.17 of its total potential returns per unit of risk. Align Technology is currently generating about 0.31 per unit of volatility. If you would invest 31,230 in Align Technology on August 30, 2024 and sell it today you would earn a total of 3,624 from holding Align Technology or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Align Technology
Performance |
| Timeline |
| American Airlines |
| Align Technology |
American Airlines and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Align Technology
The main advantage of trading using opposite American Airlines and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| American Airlines vs. Fidelity National Information | American Airlines vs. The Home Depot | American Airlines vs. Paycom Software | American Airlines vs. NXP Semiconductors NV |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |