Correlation Between American Airlines and Marvell Technology
Can any of the company-specific risk be diversified away by investing in both American Airlines and Marvell 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 Marvell 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 Marvell Technology, you can compare the effects of market volatilities on American Airlines and Marvell 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 Marvell Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Marvell Technology.
Diversification Opportunities for American Airlines and Marvell Technology
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Marvell is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Marvell Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marvell 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 Marvell Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marvell Technology has no effect on the direction of American Airlines i.e., American Airlines and Marvell Technology go up and down completely randomly.
Pair Corralation between American Airlines and Marvell Technology
Assuming the 90 days trading horizon American Airlines Group is expected to generate 1.06 times more return on investment than Marvell Technology. However, American Airlines is 1.06 times more volatile than Marvell Technology. It trades about 0.35 of its potential returns per unit of risk. Marvell Technology is currently generating about 0.37 per unit of risk. If you would invest 6,136 in American Airlines Group on August 30, 2024 and sell it today you would earn a total of 2,402 from holding American Airlines Group or generate 39.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.56% |
| Values | Daily Returns |
American Airlines Group vs. Marvell Technology
Performance |
| Timeline |
| American Airlines |
| Marvell Technology |
American Airlines and Marvell Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Marvell Technology
The main advantage of trading using opposite American Airlines and Marvell Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Marvell 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 Marvell Technology will offset losses from the drop in Marvell Technology's long position.The idea behind American Airlines Group and Marvell Technology 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.| Marvell Technology vs. Taiwan Semiconductor Manufacturing | Marvell Technology vs. Microsoft | Marvell Technology vs. Banco Santander Chile | Marvell Technology vs. Alphabet |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |