Correlation Between American Airlines and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both American Airlines and Citizens Financial 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 Citizens Financial 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 Citizens Financial Group,, you can compare the effects of market volatilities on American Airlines and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Citizens Financial.
Diversification Opportunities for American Airlines and Citizens Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Citizens is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of American Airlines i.e., American Airlines and Citizens Financial go up and down completely randomly.
Pair Corralation between American Airlines and Citizens Financial
Assuming the 90 days trading horizon American Airlines Group is expected to generate 1.88 times more return on investment than Citizens Financial. However, American Airlines is 1.88 times more volatile than Citizens Financial Group,. It trades about 0.24 of its potential returns per unit of risk. Citizens Financial Group, is currently generating about 0.05 per unit of risk. If you would invest 8,255 in American Airlines Group on October 17, 2024 and sell it today you would earn a total of 2,737 from holding American Airlines Group or generate 33.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Citizens Financial Group,
Performance |
| Timeline |
| American Airlines |
| Citizens Financial Group, |
American Airlines and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Citizens Financial
The main advantage of trading using opposite American Airlines and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| American Airlines vs. Charter Communications | American Airlines vs. Verizon Communications | American Airlines vs. Vulcan Materials | American Airlines vs. Telecomunicaes Brasileiras SA |
| Citizens Financial vs. Take Two Interactive Software | Citizens Financial vs. United Airlines Holdings | Citizens Financial vs. American Airlines Group | Citizens Financial vs. STMicroelectronics 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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