Correlation Between American Airlines and GP Investments
Can any of the company-specific risk be diversified away by investing in both American Airlines and GP 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 GP 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 GP Investments, you can compare the effects of market volatilities on American Airlines and GP 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 GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and GP Investments.
Diversification Opportunities for American Airlines and GP Investments
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and GPIV33 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP 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 GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of American Airlines i.e., American Airlines and GP Investments go up and down completely randomly.
Pair Corralation between American Airlines and GP Investments
Assuming the 90 days trading horizon American Airlines Group is expected to generate 0.7 times more return on investment than GP Investments. However, American Airlines Group is 1.43 times less risky than GP Investments. It trades about 0.26 of its potential returns per unit of risk. GP Investments is currently generating about 0.13 per unit of risk. If you would invest 7,872 in American Airlines Group on August 27, 2024 and sell it today you would earn a total of 859.00 from holding American Airlines Group or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. GP Investments
Performance |
| Timeline |
| American Airlines |
| GP Investments |
American Airlines and GP Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and GP Investments
The main advantage of trading using opposite American Airlines and GP Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, GP 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 GP Investments will offset losses from the drop in GP Investments' long position.The idea behind American Airlines Group and GP Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| GP Investments vs. Fras le SA | GP Investments vs. Clave Indices De | GP Investments vs. BTG Pactual Logstica | GP Investments vs. Telefonaktiebolaget LM Ericsson |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |