Correlation Between CPU SOFTWAREHOUSE and American Airlines
Can any of the company-specific risk be diversified away by investing in both CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPU SOFTWAREHOUSE and American Airlines Group, you can compare the effects of market volatilities on CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPU SOFTWAREHOUSE and American Airlines.
Diversification Opportunities for CPU SOFTWAREHOUSE and American Airlines
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CPU and American is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CPU SOFTWAREHOUSE and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE i.e., CPU SOFTWAREHOUSE and American Airlines go up and down completely randomly.
Pair Corralation between CPU SOFTWAREHOUSE and American Airlines
Assuming the 90 days trading horizon CPU SOFTWAREHOUSE is expected to generate 2.27 times more return on investment than American Airlines. However, CPU SOFTWAREHOUSE is 2.27 times more volatile than American Airlines Group. It trades about 0.15 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.12 per unit of risk. If you would invest 79.00 in CPU SOFTWAREHOUSE on October 11, 2024 and sell it today you would earn a total of 11.00 from holding CPU SOFTWAREHOUSE or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPU SOFTWAREHOUSE vs. American Airlines Group
Performance |
| Timeline |
| CPU SOFTWAREHOUSE |
| American Airlines |
CPU SOFTWAREHOUSE and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPU SOFTWAREHOUSE and American Airlines
The main advantage of trading using opposite CPU SOFTWAREHOUSE and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPU SOFTWAREHOUSE 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.| CPU SOFTWAREHOUSE vs. North American Construction | CPU SOFTWAREHOUSE vs. American Eagle Outfitters | CPU SOFTWAREHOUSE vs. Titan Machinery | CPU SOFTWAREHOUSE vs. Penta Ocean Construction Co |
| American Airlines vs. CPU SOFTWAREHOUSE | American Airlines vs. URBAN OUTFITTERS | American Airlines vs. CyberArk Software | American Airlines vs. GBS Software AG |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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