Correlation Between FORWARD AIR and American Airlines
Can any of the company-specific risk be diversified away by investing in both FORWARD AIR 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 FORWARD AIR and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORWARD AIR P and American Airlines Group, you can compare the effects of market volatilities on FORWARD AIR 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 FORWARD AIR with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and American Airlines.
Diversification Opportunities for FORWARD AIR and American Airlines
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FORWARD and American is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and FORWARD AIR 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 FORWARD AIR P 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 FORWARD AIR i.e., FORWARD AIR and American Airlines go up and down completely randomly.
Pair Corralation between FORWARD AIR and American Airlines
Assuming the 90 days horizon FORWARD AIR is expected to generate 1.68 times less return on investment than American Airlines. In addition to that, FORWARD AIR is 1.58 times more volatile than American Airlines Group. It trades about 0.08 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.21 per unit of volatility. If you would invest 953.00 in American Airlines Group on August 31, 2024 and sell it today you would earn a total of 426.00 from holding American Airlines Group or generate 44.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FORWARD AIR P vs. American Airlines Group
Performance |
| Timeline |
| FORWARD AIR P |
| American Airlines |
FORWARD AIR and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FORWARD AIR and American Airlines
The main advantage of trading using opposite FORWARD AIR and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR 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.| FORWARD AIR vs. Data3 Limited | FORWARD AIR vs. PLAYTIKA HOLDING DL 01 | FORWARD AIR vs. DOCDATA | FORWARD AIR vs. CNVISION MEDIA |
| American Airlines vs. RYANAIR HLDGS ADR | American Airlines vs. Southwest Airlines Co | American Airlines vs. Ryanair Holdings plc | American Airlines vs. Superior Plus Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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