Correlation Between Fertilizantes Heringer and American Airlines
Can any of the company-specific risk be diversified away by investing in both Fertilizantes Heringer 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 Fertilizantes Heringer and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fertilizantes Heringer SA and American Airlines Group, you can compare the effects of market volatilities on Fertilizantes Heringer 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 Fertilizantes Heringer with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fertilizantes Heringer and American Airlines.
Diversification Opportunities for Fertilizantes Heringer and American Airlines
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fertilizantes and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fertilizantes Heringer SA and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Fertilizantes Heringer 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 Fertilizantes Heringer SA 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 Fertilizantes Heringer i.e., Fertilizantes Heringer and American Airlines go up and down completely randomly.
Pair Corralation between Fertilizantes Heringer and American Airlines
Assuming the 90 days trading horizon Fertilizantes Heringer SA is expected to under-perform the American Airlines. In addition to that, Fertilizantes Heringer is 1.96 times more volatile than American Airlines Group. It trades about -0.02 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.05 per unit of volatility. If you would invest 6,515 in American Airlines Group on September 13, 2024 and sell it today you would earn a total of 3,945 from holding American Airlines Group or generate 60.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fertilizantes Heringer SA vs. American Airlines Group
Performance |
| Timeline |
| Fertilizantes Heringer |
| American Airlines |
Fertilizantes Heringer and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fertilizantes Heringer and American Airlines
The main advantage of trading using opposite Fertilizantes Heringer and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fertilizantes Heringer 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.| Fertilizantes Heringer vs. Toyota Motor | Fertilizantes Heringer vs. Honda Motor Co | Fertilizantes Heringer vs. Taiwan Semiconductor Manufacturing | Fertilizantes Heringer vs. Sony Group |
| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines Co | 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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