Correlation Between American Airlines and Lennar
Can any of the company-specific risk be diversified away by investing in both American Airlines and Lennar 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 Lennar 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 Lennar, you can compare the effects of market volatilities on American Airlines and Lennar 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 Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Lennar.
Diversification Opportunities for American Airlines and Lennar
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Lennar is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar 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 Lennar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennar has no effect on the direction of American Airlines i.e., American Airlines and Lennar go up and down completely randomly.
Pair Corralation between American Airlines and Lennar
Assuming the 90 days trading horizon American Airlines Group is expected to generate 1.79 times more return on investment than Lennar. However, American Airlines is 1.79 times more volatile than Lennar. It trades about 0.32 of its potential returns per unit of risk. Lennar is currently generating about -0.03 per unit of risk. If you would invest 8,104 in American Airlines Group on September 12, 2024 and sell it today you would earn a total of 2,323 from holding American Airlines Group or generate 28.66% 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. Lennar
Performance |
| Timeline |
| American Airlines |
| Lennar |
American Airlines and Lennar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Lennar
The main advantage of trading using opposite American Airlines and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Lennar 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 Lennar will offset losses from the drop in Lennar's long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines Co | American Airlines vs. United Airlines Holdings |
| Lennar vs. Capital One Financial | Lennar vs. American Airlines Group | Lennar vs. Credit Acceptance | Lennar vs. Tres Tentos Agroindustrial |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |