Correlation Between American Airlines and Atlassian Plc
Can any of the company-specific risk be diversified away by investing in both American Airlines and Atlassian Plc 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 Atlassian Plc 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 Atlassian Plc, you can compare the effects of market volatilities on American Airlines and Atlassian Plc 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 Atlassian Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Atlassian Plc.
Diversification Opportunities for American Airlines and Atlassian Plc
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Atlassian is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Atlassian Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlassian Plc 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 Atlassian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlassian Plc has no effect on the direction of American Airlines i.e., American Airlines and Atlassian Plc go up and down completely randomly.
Pair Corralation between American Airlines and Atlassian Plc
Assuming the 90 days trading horizon American Airlines Group is expected to generate 2.09 times more return on investment than Atlassian Plc. However, American Airlines is 2.09 times more volatile than Atlassian Plc. It trades about 0.32 of its potential returns per unit of risk. Atlassian Plc is currently generating about 0.39 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 Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Atlassian Plc
Performance |
| Timeline |
| American Airlines |
| Atlassian Plc |
American Airlines and Atlassian Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Atlassian Plc
The main advantage of trading using opposite American Airlines and Atlassian Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Atlassian Plc 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 Atlassian Plc will offset losses from the drop in Atlassian Plc's long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines Co | American Airlines vs. United Airlines Holdings |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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