Correlation Between American Airlines and Mangels Industrial
Can any of the company-specific risk be diversified away by investing in both American Airlines and Mangels Industrial 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 Mangels Industrial 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 Mangels Industrial SA, you can compare the effects of market volatilities on American Airlines and Mangels Industrial 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 Mangels Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Mangels Industrial.
Diversification Opportunities for American Airlines and Mangels Industrial
-0.96 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Mangels is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Mangels Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangels Industrial 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 Mangels Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangels Industrial has no effect on the direction of American Airlines i.e., American Airlines and Mangels Industrial go up and down completely randomly.
Pair Corralation between American Airlines and Mangels Industrial
Assuming the 90 days trading horizon American Airlines Group is expected to generate 0.81 times more return on investment than Mangels Industrial. However, American Airlines Group is 1.24 times less risky than Mangels Industrial. It trades about 0.01 of its potential returns per unit of risk. Mangels Industrial SA is currently generating about -0.07 per unit of risk. If you would invest 8,900 in American Airlines Group on August 28, 2024 and sell it today you would lose (169.00) from holding American Airlines Group or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Mangels Industrial SA
Performance |
| Timeline |
| American Airlines |
| Mangels Industrial |
American Airlines and Mangels Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Mangels Industrial
The main advantage of trading using opposite American Airlines and Mangels Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Mangels Industrial 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 Mangels Industrial will offset losses from the drop in Mangels Industrial's long position.| American Airlines vs. Metalurgica Gerdau SA | American Airlines vs. Multilaser Industrial SA | American Airlines vs. Zoom Video Communications | American Airlines vs. Verizon Communications |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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