Correlation Between BOS Better and American Airlines
Can any of the company-specific risk be diversified away by investing in both BOS Better 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 BOS Better and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOS Better Online and American Airlines Group, you can compare the effects of market volatilities on BOS Better 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 BOS Better with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOS Better and American Airlines.
Diversification Opportunities for BOS Better and American Airlines
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BOS and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and BOS Better 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 BOS Better Online 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 BOS Better i.e., BOS Better and American Airlines go up and down completely randomly.
Pair Corralation between BOS Better and American Airlines
Given the investment horizon of 90 days BOS Better Online is expected to generate 2.16 times more return on investment than American Airlines. However, BOS Better is 2.16 times more volatile than American Airlines Group. It trades about 0.22 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.2 per unit of risk. If you would invest 328.00 in BOS Better Online on October 25, 2024 and sell it today you would earn a total of 58.00 from holding BOS Better Online or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOS Better Online vs. American Airlines Group
Performance |
| Timeline |
| BOS Better Online |
| American Airlines |
BOS Better and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOS Better and American Airlines
The main advantage of trading using opposite BOS Better and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOS Better 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.| BOS Better vs. Mynaric AG ADR | BOS Better vs. Knowles Cor | BOS Better vs. Comtech Telecommunications Corp | BOS Better vs. Ituran Location and |
| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. United Airlines Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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