Correlation Between Azul SA and AMERICAN
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By analyzing existing cross correlation between Azul SA and AMERICAN WTR CAP, you can compare the effects of market volatilities on Azul SA and AMERICAN 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 Azul SA with a short position of AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azul SA and AMERICAN.
Diversification Opportunities for Azul SA and AMERICAN
Very good diversification
The 3 months correlation between Azul and AMERICAN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and AMERICAN WTR CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN WTR CAP and Azul SA 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 Azul SA are associated (or correlated) with AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN WTR CAP has no effect on the direction of Azul SA i.e., Azul SA and AMERICAN go up and down completely randomly.
Pair Corralation between Azul SA and AMERICAN
Given the investment horizon of 90 days Azul SA is expected to under-perform the AMERICAN. In addition to that, Azul SA is 13.22 times more volatile than AMERICAN WTR CAP. It trades about -0.01 of its total potential returns per unit of risk. AMERICAN WTR CAP is currently generating about -0.01 per unit of volatility. If you would invest 9,415 in AMERICAN WTR CAP on October 25, 2024 and sell it today you would lose (170.00) from holding AMERICAN WTR CAP or give up 1.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.17% |
| Values | Daily Returns |
Azul SA vs. AMERICAN WTR CAP
Performance |
| Timeline |
| Azul SA |
| AMERICAN WTR CAP |
Azul SA and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azul SA and AMERICAN
The main advantage of trading using opposite Azul SA and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azul SA position performs unexpectedly, AMERICAN 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 will offset losses from the drop in AMERICAN's long position.The idea behind Azul SA and AMERICAN WTR CAP 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 vs. Westrock Coffee | AMERICAN vs. Cirmaker Technology | AMERICAN vs. Compania Cervecerias Unidas | AMERICAN vs. Diageo PLC ADR |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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