Correlation Between Asure Software and American Airlines
Can any of the company-specific risk be diversified away by investing in both Asure Software and American Airlines 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 Asure Software and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asure Software and American Airlines Group, you can compare the effects of market volatilities on Asure Software and American Airlines 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 Asure Software with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asure Software and American Airlines.
Diversification Opportunities for Asure Software and American Airlines
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asure and American is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Asure Software and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Asure Software 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 Asure Software are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Asure Software i.e., Asure Software and American Airlines go up and down completely randomly.
Pair Corralation between Asure Software and American Airlines
Given the investment horizon of 90 days Asure Software is expected to generate 3.0 times less return on investment than American Airlines. In addition to that, Asure Software is 1.99 times more volatile than American Airlines Group. It trades about 0.03 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.15 per unit of volatility. If you would invest 1,360 in American Airlines Group on August 29, 2024 and sell it today you would earn a total of 104.00 from holding American Airlines Group or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asure Software vs. American Airlines Group
Performance |
| Timeline |
| Asure Software |
| American Airlines |
Asure Software and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asure Software and American Airlines
The main advantage of trading using opposite Asure Software and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asure Software position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.The idea behind Asure Software and American Airlines Group 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.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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