Correlation Between Chemtrade Logistics and American Airlines
Can any of the company-specific risk be diversified away by investing in both Chemtrade Logistics 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 Chemtrade Logistics and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemtrade Logistics Income and American Airlines Group, you can compare the effects of market volatilities on Chemtrade Logistics 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 Chemtrade Logistics with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemtrade Logistics and American Airlines.
Diversification Opportunities for Chemtrade Logistics and American Airlines
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chemtrade and American is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Chemtrade Logistics 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 Chemtrade Logistics Income 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 Chemtrade Logistics i.e., Chemtrade Logistics and American Airlines go up and down completely randomly.
Pair Corralation between Chemtrade Logistics and American Airlines
Assuming the 90 days horizon Chemtrade Logistics is expected to generate 9.38 times less return on investment than American Airlines. But when comparing it to its historical volatility, Chemtrade Logistics Income is 2.12 times less risky than American Airlines. It trades about 0.07 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,391 in American Airlines Group on September 13, 2024 and sell it today you would earn a total of 353.50 from holding American Airlines Group or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Chemtrade Logistics Income vs. American Airlines Group
Performance |
| Timeline |
| Chemtrade Logistics |
| American Airlines |
Chemtrade Logistics and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemtrade Logistics and American Airlines
The main advantage of trading using opposite Chemtrade Logistics and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemtrade Logistics 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.| Chemtrade Logistics vs. NETGEAR | Chemtrade Logistics vs. Uber Technologies | Chemtrade Logistics vs. Lipocine | Chemtrade Logistics vs. Senmiao Technology |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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